Euro zone unemployment rate reaches 10%

| January 29, 2010 | 0 Comments

Figures from Eurostat have today revealed that the number of people unemployed across the euro zone grew to 15.8 million in December.

The latest figures mean that the unemployment rate across the 16 countries that use the euro is 10% - the highest rate since 1999.

Analysts believe that the unemployment rate will continue to rise across the region in the coming months.

In the meantime, Spain continues to have the highest unemployment in the euro zone at 19.5%, the country has been hit by a severe slump within the construction industry, which has led to a significant amount of job losses.

Meanwhile, the lowest rate is in the Netherlands at 4%, followed by Austria at 5.4%.

Earlier this month, the European Central Bank (ECB) elected to keep interest rates on hold at the historic low of 1% for the eighth consecutive month, as widely expected.

Interest rates are expected to remain on hold for the long-term as a result of uneven growth and low inflation.

The euro zone as a whole emerged from recession in the third quarter after experiencing positive growth.

However, questions have been raised over the recovery of the euro zone, in particular Greece’s deteriorating fiscal situation.

Greece, which is the euro zone’s weakest economy, has the highest debt of the 16-member bloc.

Currently, its public debt stands at €300 billion (£268 billion) and there is speculation that the EU will have to inject funds into its economy.

According to Rainer Bruederle, Germany’s economy minister, the ‘dangerous weakness’ of some EU states could threaten the entire euro zone.

He said: “Some euro states are showing dangerous weakness. This may have fatal effects on all states in the euro zone.”

However, speaking at the World Economic Forum in Davos, Greek Prime Minister George Papandreou has denied speculation that it will have to be bailed out by the European Union (EU).

He said countries like his “are being used as the weak link, if you like, of the euro zone.”

However, there are concerns that if Greece is not rescued by wealthier countries, investors may start to lose confidence in other European member states.

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