The pain of southern Europe's unemployed

University students burn an EU flag outside the Greek parliament in Athens (28 March 2013) Some economists say Germany's austerity measures have trapped southern countries in a cycle of decline

When Europe's unemployment figures were published today, they once again underlined the north-south divide. Increasingly there are two Europes.

As Andrea Broughton from the Institute for Employment Studies points out: "At the lowest end are Austria, with an unemployment rate of just 4.8%, Germany (5.4%) and Luxembourg (5.5%).

"This contrasts with Greece, where the rate is 26.2% (December 2012 figure), Spain, with a rate of 26.3%' and Portugal, with a rate of 17.5%."

Perhaps the most disturbing figure is for youth unemployment. The average rate for the under 25s in the EU is 23.5%. Nearly a quarter of Europe's youth are not working. In Spain the figure is 55.7%.

For the moment the strategy for keeping the eurozone together is sharpening Europe's divide.

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Europe's leaders have been able to insist the crisis was 'made in America' - but the truth is somewhat different”

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The Germans believe that a combination of austerity and structural reforms will eventually spark growth in southern Europe and narrow the gap in competitiveness.

There are a significant number of officials and economists, however, who doubt the policy is working. Indeed they believe that several countries are now trapped in a cycle of decline.

Only this week the French President Francois Hollande said that "sticking with austerity would condemn Europe not just to recession but an explosion".

Lost generation

So far Europe's young people have been remarkably tolerant of unemployment levels reminiscent of the Great Depression.

There has been some burning of EU flags and anger with the Germans but Europe's so-called lost generation has not yet challenged the role of Europe and its institutions.

Brussels and Europe's leaders have been able to blame the crisis on the financial crisis of 2008 and to insist it was "made in America". But the truth is somewhat different.

People queuing in front of the unemployment centre in Madrid (4 March 2013) More than half of Spain's under 25s are jobless

The structure of the eurozone, with one interest rate for all, enabled countries like Spain to embark on a construction boom. Ireland had a similar story. Greece initially benefitted from unrestricted flows of outside capital and wages soared.

What the financial crisis in America did was to bring the party to an end. A reckoning followed. The price is still being paid with wages and costs being slashed in an attempt for these mainly southern countries to regain competitiveness within a monetary union.

The question remains: in the end were the economic differences between the countries which adopted the euro too great and are millions of young Europeans paying for that mis-judgment?

Whilst the official line is that the euro has been saved, privately there is far more anxiety.

Increasingly the threats to the eurozone are seen as not so much the bond spreads, but the combination of deepening recession and rising unemployment in parts of Europe.

As Nicholas Spiro of Spiro Sovereign Stategy said, "the surge in joblessness coupled with this morning's grim PMI surveys [manufacturing surveys] are a glaring example of the extent to which market sentiment towards the eurozone has become detached from economic fundamentals. The disconnect is most pronounced in Spain and Italy but is also manifest in France".

Europe's leaders are in the fourth year of fighting this crisis and the reality is that the gap between some of those countries which share the common currency is only widening.

Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this

    Comment number 305.

    found another link by the same author as in 302, its a more general & better written article than in 302 (the transfer union stuff is better in 302 link tho). There are aspects of economics I disagree with him on but as a history of how things got like this, I think its reasonable

  • rate this

    Comment number 304.

    @276 For whom??? Until recently Germans had no realistic alternative they could vote for- unless you consider Die Linke and NPD realistic alternatives. They do now, as the new eurosceptic party Alternative fur Deutschland has been founded and most probably will take part in the September elections for the Bundestag. It remains to be seen whether the newcomers will pass the 5% threshold, however.

  • rate this

    Comment number 303.

    @280.David Horton
    If you read the economic policy part of UKIPs website then they love German monetary/fiscal policies,especially severe austerity, & propose implementing the same in the UK, their sole objection is to Germany implementing them or any other policies in the UK

  • rate this

    Comment number 302.

    The following article by a Swiss based German banker explains how the Eurozone ended up where it is from a different angle to my approach. I don't agree with everything in it & its a bit rambling,
    He ends with the idea that the Euro will eventually split into two currencies which I suggested as a solution years ago

  • rate this

    Comment number 301.

    280 David

    "delusional lackeys harp on about UKIP being racist, fascist, far right"

    The party without a single UK parliamentary seat is irrelevant. The Monster Raving Loony Party gets more votes than UKIP

    Many UKIP supporters either emigrated or seem to live abroad. UKIP is a joke attracting rather poorly educated people.

  • rate this

    Comment number 300.

    297 Andy

    Not that old chestnut again !

    Improperly accounted-for-expenditure/fraud is higher in the UK accounts. EU standards are higher than those of our PARLIAMENT (98% rather than our 95%)

    The accounts of B D W P which distributes social security benefits, have been qualified by the N A O for 20 years. Fraud and error in the payment of benefits amount £3.3 billion in 2010-11

  • rate this

    Comment number 299.

    If everyone stops importing, no need for a common currency.
    Is that the true objective of austerity?

    No, if one reads the policy documents, they're in complete denial, they cannot accept their policies would lead to such a result it must therefore be caused by un-German like behaviour by the others & if only the others can be made to behave like Germany everything will be fine

  • rate this

    Comment number 298.

    291 Queer

    "euro allowed leasders borrow heavily for their countries and scam off a lot, the poor people then having to pay"

    I take it you have proof of these 'scams'?

    Blaming the EU or Germany/Troika for your present woes? People like shipowner Taki left Greece decades ago with his business because of the mess it was in and the corruption

    GROW UP or you'll get the colonels back

  • rate this

    Comment number 297.

    Is it merely coincidence that Austrian and French finance ministers have been/are in trouble for fraud? how far into the Eurozone does this stuff extend? Where are the missing billions form Last Year's Eu budget? still missing...

    The Eurozone shouldn't get another penny off other Eu members til Brussells publishes the accounts (after they have been properly audited)...

  • rate this

    Comment number 296.

    Things like the EU and other "European" organizations have always had as an ultimate goal to try and *force* a single nation out of the entire Europe. Anyone with half a brain can see that will never succeed as you can not create a country or have unity with so many different cultures and languages. Countries like Canada and Belgium with two cultures and languages can barely stay together!

  • rate this

    Comment number 295.

    #293 Do you mean South or dolt? That Dutch pig farmer seems to fit the description. He doesn't realise that soon the country he represents as finance minister will need Cypriot-type help. Hope he enjoys being poor & feeling thieves have fleeced pension savings while he is feeding the slop. Oh, I belive he thinks he's intelligent.

  • rate this

    Comment number 294.


    ' ..."Austerity is not working"

    What would?'

    EUp: Leaving the Euro would definitely be better. Ultimately leaving the "EU"-shambles would be better for any country.

    One of the reasons these countries are in trouble is that "EU"-funding mechanisms encourage fraud and corruption and give the wrong sort of person a leg up

    Secret payments to politicians helping ronguns?

  • rate this

    Comment number 293.

    The Netherlands, Berlin's most important ally in pushing for greater budgetary discipline in Europe, has fallen into an economic crisis itself. The economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs and a second bank has been nationalised.

    I'm not quite sure which part of the sunny douth that Holland belongs with. France probably

  • rate this

    Comment number 292.

    "HARDtalk Watch
    Nobel winning economist, Christopher Pissarides says Cyprus should not leave eurozone."

    So this bloke gets loads of coverage including a picture here at the BBC but all those economists who say the Eurozone should be dismantled get hardly any coverage.

    Classic BBC pro-"EU" bias.

  • rate this

    Comment number 291.

    Europe is finished and the softies leading it don't care. Probably hiving money of the tax-payers and putting it in Asian off-shore. Some form of border control on money moving should be enforced, but won't be, just as the Euro allowed leasders to borrow heavily for their countries and scam off a lot, the poor people then having to pay. Take care Europe. You don't have leaders, only pretenders.

  • rate this

    Comment number 290.

    The majority, in fact all, troubled nations will lurch to the left during the coming years. It should be interesting in Germany come August. Let's hope for some decent media coverage of election issues and who thinks whom is to blame for what. French establishment doesn't realis yet that socialists were elected. Spain can do nothing next but communism next. Italy is asset stripping mafia.

  • rate this

    Comment number 289.

    People choose to forget that for some countries to be rich, others have to be poor. As Asia and Africa (on the whole) become richer, the world as we have come to know it will change, Europe will continue to become poorer and our standards of living will decrease, this is the part of capitalism that westerners have ignored, anyone who believes otherwise is fooling themselves in my opinion.

  • rate this

    Comment number 288.

    Strangely enough, Greece always paid back, even in those days when it was building debt. Honesty in a mess. The measures forced on it by the German-led TROIKA have led to the difficulty in collecting money, but it still pays back. Can't speak for the others, though. There could have been other measures that would have 'saved' Greece while allowing/helping it to change, but the TROIKA were fools.

  • rate this

    Comment number 287.


    "-- and they will continue the support of Greece (and others) --with the new DM ?"

    I doubt it, but I haven't got the time at the moment to look it up.

    It is the Alternative für Deutschland

    You schpeek Cherman. You could look it up.

    By the way it's "for whom?" and not "for who?"

    But then, both your German and your English are better than my Turkish


  • rate this

    Comment number 286.

    Germany, if you ruin the Euro through your short-sighted and power-mad leaders, your will suffer badly. Nobody wants you anyway! (Dog and scorpion story - I can't stop myself from stinging you after you saved my life). But the Mark would go so high, people will find it cheaper to buy a Bentley.


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