The release of Europe’s unemployment figures and the news that manufacturing is on the decline in all but two of the Eurozone member nations is a clear sign that austerity is not working.
Unemployment throughout the Eurozone rose to its highest levels since the single currency’s creation, rising to a staggering 10.9% in March. Youth unemployment in Europe rose to 22.1% meaning that over 3.345m adults under the age of 25 are out of work. In Italy, Youth unemployment rose to an appalling 35.9% and in Spain to 50%.
According to the latest Purchasing Manufacturing Index (PMI) the Euro zone’s manufacturing output fell across the board with only Austria and Ireland struggling past the 50 mark. All other nations showed decreases suggesting that the Euro is about to enter an even tougher recession than the one that occurred in 2008.
The big surprise is Germany, whom many analysts thought was showing strong manufacturing output. In reality it hit a 33 month low with only 46.2.
Markit, which compiles the PMI survey said;
“Austerity in deficit-fighting countries is having an increasing impact on demand across the region. Even German manufacturing output showed a renewed decline, attributed by many firms to weak demand from southern Europe.
As such, it is hard to see where growth will come from in coming months, unless export demand picks up strongly from countries outside of the Eurozone. The ECB’s latest forecast of merely a slight contraction of GDP this year is therefore already looking optimistic.”
Surely it is time for the European governments to change strategy when it comes to austerity. Harsher cuts have only reduced growth opportunities and if anything have sucked cash out of the economy and reduced the coffers of governments.
With more and more people out of work the demand for goods is bound to fall, less tax is being collected and more government money needs to be spent on benefits for the jobless. The EU’s dogged determination to stick to a failing strategy has put the entire region in peril of falling into a vicious cycle that it may not be able to escape from.
With key elections coming up in France and Greece it is in the hands of the people to force their governments to change strategy from austerity to growth.
The Pound to Euro exchange rate is currently trading at 1.223
The Pound to US Dollar exchange rate is currently trading at 1.620
The Euro to US Dollar exchange rate is currently trading at 1.314
The Euro to Pound exchange rate is currently trading at 0.811
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