Eurozone unemployment reached a record high as a United Nations agency warned of a “catastrophic” rise in the jobless count if the sovereign debt crisis worsens.

By Tom Rowley
7:45PM BST 31 Aug 2012


The jobless count was particularly severe in Spain, where it stood at 25pc, according to Eurostat.

More than 18m people were out of work in the 17 eurozone nations last month, the highest total since records began in 1995. The jobless count was particularly severe in Spain, where it stood at 25pc, according to Eurostat.

A European Commission spokesman warned that the numbers were now at a “critical” level and could pose a “serious threat to social cohesion” if they were not tackled, leading analysts to warn of even tighter household spending ahead.

The data came as the UN’s International Labour Organisation issued a stark assessment of future job losses if Greece left the eurozone or the bloc split. Greece’s exit would see one in eight without work across the eurozone, with young people faring worst, predicted Ekkehard Ernst, a senior economist at the organisation.

“It would be a catastrophe for the European youth,” Mr Ernst told German newspaper Sueddeutsche Zeitung. Spanish unemployment would rise to 27.7pc by 2014, with 51.3pc of 15-24 year-olds out of work, he said. Portugal would also record a significant rise in its jobless count.

He stressed that a Greek exit would not only affect countries with flagging economies, predicting even Germany would see nearly one in 10 unemployed.

A complete break-up of the single currency would create a further surge in the jobless, Mr Ernest added. German unemployment would rise to 11.3pc in two years and remain at that level. The jobless rate would also soar to 17pc in France while more than one in three Spaniards would be without a job.

The young would again be the worst hit, with youth unemployment rising to 34pc in France, 38pc in Italy and 59pc in Spain.

The collapse would only exacerbate the current youth unemployment rate, which stood at 22.6pc in the eurozone in July, according to Eurostat.

Greece is suffering from the highest youth unemployment, at 54pc, just ahead of Spain’s count of 53pc.

The EU spokesman said the figures showed eurozone governments now had to do everything possible to avoid a “lost generation”.

Ben May, from Capital Economics, said July’s rise in joblessness combined with fuel price increases “supports the view the downturn in household spending will intensify in the second half of this year”.

http://www.telegraph.co.uk/finance/financialcrisis/9513041/Employment-catastrophe-if-euro-bloc-splits.html