Unemployment in the Eurozone has risen to a record high of 10.9%, continuing a worsening trend since last year. In the 17 countries comprising the Eurozone, the countries whose currency is based on the euro, there was only a rise in unemployment of 169,000 from February’s mark, but enough to raise unemployment up from 10.8%. By contrast, the U.S. has seen unemployment fall from 9.1% last August to 8.2% in March. Europe’s growing crisis has lead to renewed calls to shift their economic focus from austerity to spending, with the president of the European Central Bank calling for a growth pact.
Led by Germany, Europe’s #1 economy, and Britain, Europe has tested austerity economics – reduced spending and raising taxes – championed by many conservatives and Right-wing analysts who say that tackling debt is the best way to revive a faltering economy, claiming reduced debt will restore confidence in the markets for people to start investing again.
But progressive economists, such as Dean Baker and Paul Krugman, have been arguing for years a Keynesian approach to restoring growth after the recession, that deficit spending is not only the best way to resuscitate the economy, but austerity actually exacerbates a recession, prolonging the downturn and increasing unemployment.
And now, it seems, their projections are in fact coming to fruition. After some initial upticks in some European economies (Ireland was lauded early as a prime example of austerity success), half of Europe has now slipped back into a recession. Unemployment in Spain and Greece is over 20%, and, even worse, unemployment for people under 25 is staggeringly over 50%. Even Germany has begun contracting.
With elections set this week in Greece and, more importantly, France, where the likely winners will push for less austerity and more pro-growth initiatives, it’s likely Europe will see even more opposition to their failed fiscal adherence to austerity of the last two years.
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