The Worst May Not Be Over In Europe: Unemployment Hits 10%

The worst of the economic downturn may be over in the US, China, India, and other economies in Asia. It is another matter in Europe. Spain has a double-digit jobless rate and the figure is close to 40% for those under 25 years old.

The entire Eurozone has suffered more than most regions economically. Today, the EU announced that unemployment in the Eurozone had moved above 10% for the first time since the union was formed a decade ago. The group of nations has sixteen members

The news from Europe is bad for the US, China, and other big exporters of finished products and consumer goods. The CIA Factbook reports that the EU has a GDP of over $18 billion, while America’s is $14 billion and China’s under $5 billion. Weakness in consumer spending in Europe will harm economic recovery in the rest of the developed and developing world.

The EU has a large disadvantage when it comes to stimulating its large economy. Its sixteen members each have different needs, different budgets, and different national debts. Germany’s economy may be doing fairly well. But, Greece, Spain, and Ireland are in financial trouble and do not have the capital to put into job creation or reindustrializtion. It is not fair to say that the EU is no stronger than its weakest members, but those troubled nations can slow the speed of any recovery in the region.

The creation of the Eurozone in 1999 seemed like a good idea to stimulate trade among the members and strengthen each economically by improving its ties to the others. The troubles in the weakest nations show that the idea may not have been a good one at all.

Douglas A. McIntyre