Eurozone is going back to work


It’s official: Eurozone unemployment is at an 8 year low.

This suggests that momentum is growing behind the recovery, particularly with the inauguration of integrationist French President Macron and Europe’s wholesale rejection of europhobes in recent elections.

However, the International Monetary Fund is still concerned about the implications of Brexit, low inflation and a weak banking sector.

Inflation is a particular worry.

Inflation, the rate at which prices rise, is a sign of a healthy, growing economy. And when employment rates go up, inflation usually follows. However, this has failed to materialise.

Inflation is still dismally low at 1.3%.

Even with quantitative easing and low interest rates set by the European Central Bank, consumer demand is still weak.

This could be because, whilst there has been job creation, those jobs aren’t full time, permanent positions, affording the job holder the ability to spend their income liberally.

Also, wage growth throughout the Eurozone is similar to the UK: it has stagnated. Consequently, the average consumer, even with the benefit of a low inflation rate, hasn’t seen much improvement in their living standards over the past decade and is still cautious about spending.

And when looking at an average, it’s always important to see how the weak links are doing: Greece and Spain are still suffering from high unemployment around the 20% mark, and particularly high youth unemployment.



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