MercoPress. South Atlantic News Agency

Euro-zone officially out of recession but with record 10% unemployment

Economic outlook still “cloudy” warns EU president Herman Van Rompuy

The unemployment rate in Euro-zone counties is currently running at 10%, its highest since August 1998, according to the statistics agency Eurostat. In November last year, another 102,000 people lost their jobs, bringing the overall figure above 15.7 million.

Altogether, more than three million jobs were lost in the Euro-zone in 2009. The worst medium sized economy hit was Spain, where unemployment is currently almost 20% while in Germany unemployment rose from 7.1% to 7.6% last year.

In all the 27 countries of the European Union some 23 million people are jobless, and the overall rate rose two points to 9.5% in 2009.

Unemployment in Latvia stands at 22.3% and in Estonia, 15.2%. At the other extreme in Netherlands the rate is 3.9%; in Austria 5.5% and in Luxembourg, 6%.

However, there are indications that things could be improving.

Eurostat also confirmed that the Euro-zone emerged from recession in the third quarter of 2009, with a 0.4% third quarter-on-quarter growth after five quarters of falling output. The EU as a whole grew 0.3% compared with the previous quarter.

However there was also still evidence of falling output in the UK, Estonia, Latvia, Hungary and Romania.

But EU president, Herman Van Rompuy, warned that the long-term economic outlook for Europe was “cloudy,” and called for an annual growth rate of at least 2% of GDP to keep pace with the rest of the world.

“The balance of power has shifted and Europe is more on the defensive now than it was a few years ago” Van Rompuy told reporters. Various EU leaders have emphasized the need to match the rise of emerging powers such as China.

Spanish prime minister, Jose Luis Rodriguez Zapatero, has suggested that the EU should set binding economic goals for member states under a 10-year plan to boost growth and competitiveness, and called for corrective measures for those countries that did not comply.

However, Spain along with Greece, Latvia and Cyprus are the three Euro-zone countries still officially in recession.

Van Rompuy signaled his backing in principle for tough measures to boost recovery but made it clear that a decision could not be taken on such proposals until after they are discussed at a summit in Brussels on February 11.

Spain proposed bringing together the heads of the 16 Euro-zone states to discuss economic policy, reviving an idea raised by France.