Unemployment in Europe peaks

August 6th 2009  

The Euro Zone is threatened by soaring unemployment and a price index with the wrong sign. Unemployment in the 16 Member States has all together reached a ten-year peak, and at the same time has inflation changed to deflation. This is what new results from Eurostat state.

The results show that within the European Union there were in June 158.000 more unemployed persons, and this means that there is now 9,4 per cent unemployed. Last year in June, 7,5 per cent were unemployed within the Euro Zone.

“With an economy, which is still in recession, and because every improvement probably will be vague, then it seems that unemployment will continue to rise this year and next year” says Martin van Vliet, economist in ING Bank.

The new tendency of inflation by -0,6 percent – a so-called deflation – will also damage Europe.

“It can be pure poison for the economy, if the price fall continues for a longer period of time. Such a spiral of deflation will cause consumers and companies to put off expenditure and investments, and it will then kill the economic activity” says Jacob Graven from Sydbank.

However, he does not consider the current level of deflation as being critical, because it most likely is temporary.

This article is from Business.dk.