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A snapshot of the eurozone

Gavin Hewitt | 15:38 UK time, Tuesday, 1 June 2010

Container ship in Bremerhaven, Germany - file picAnother day. Another set of figures. Another day of edginess in the financial markets. Another day when the euro hit a new four-year low against the dollar.

So what do we know?

In the eurozone 16 million are out of work. In the wider European Union that figure rises to 23 million. In Spain a staggering 40.3% of those under 25 are unemployed. On the brighter side the increase in unemployment is slowing. In a further example of the difference between economies, the employment situation in France is stable and the numbers out of work in Germany actually fell by 0.2%.

Generally, however, the high rates of unemployment will continue to stifle consumer spending.

Manufacturing output in the private sector slowed in May to a level not seen since the collapse of Lehman Brothers in 2008. It's an indication that the eurozone crisis is beginning to affect the real economy.

Stocks are down and the cost of servicing debt in Spain and Italy is rising. Investors are troubled by the health of Spanish banks. The European Central Bank said that banks might have to write off another 195bn euros in bad loans.

There was some better news.

Export growth is the highest in ten years - that's due to the slump in the value of the euro.

According to Standard and Poors, Europe's housing market is generally "showing signs of pulling out of a decline". But any rebound is uncertain and fragile.

What this snapshot tells us is how tenuous growth is in the eurozone. What bounce there is seems to be coming from exports. There are also signs that Germany's shoppers were more active in April.

What today underlines again is that the biggest challenge facing Europe is how to grow its economies. The economist Nouriel Roubini wrote that the eurozone must "deregulate, liberalise, reform the south and stoke demand in the north to restore dynamism and growth; ease monetary policy to prevent deflation and boost competitiveness".

As so often in Europe the need to reform gets caught up with the political project. The Italian Economy Minister, Giulio Tremonti, said the threats to the euro were "affecting the very process of Europe-building". "We are a continent," he went on, "we have a market, we have a single currency, but we don't yet have a common government".

Others are urging that moves towards closer integration be put on ice and that Europe's leaders focus on getting Europe growing and working again, even if that means weakening and reducing some regulations.

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