European Unemployment remains above 10%

As the likes of Spain continue to suffer from massive unemployment, 20%+ it was revealed that unemployment in the euro zone as a whole remained at a record 10% for the fifth month in a row. Official statistics confirm that 16 million people remained unemployed in the euro zone amid concerns that the European economy is, like the UK, potentially set for a very difficult and potentially damaging downturn.

On the positive side we saw a reduction in euro zone inflation from the 1.7% figure in July to 1.6% in August which is well below the 2% target figure suggested by the ECB. While it has to be said that the outlook for the euro zone economy is probably no different to that for the UK economy and the US economy, it is the growing financial strain upon the European Union which is starting to concern many. The euro zone has struggled of late and the problems with the Greek economy clearly show the potential problems the European Union will face in the future. The problems of the PIGS (Portugal, Ireland, Greece and Spain) are still with us. Ireland’s banking issues bubbled to the surface this week but it will be another economies turn to be in the spotlight next month.

With the European Union looking for members to increase their funding in the short, medium and longer term this is placing considerable pressure on local economies and member state governments. High unemployment will be with us for several years as austerity measures kick in and the bloated state sector goes on an enforced diet. In turn this impacts on demand and without demand you have no growth.