There was discussion in the financial press today and yesterday about the fact that the EU has extended the deadline by which they expect countries like France, Spain and Italy to meet the 3% deficit to GDP targets which the EU has foolishly built into their common currency. Because of the EU obsession with labour market supply side approaches which emphasize inefficient job search and labour market rigidities as the explanation for unemployment along with the ECB’s refusal to have a well developed program of quantitative easing, unemployment continues to be very elevated in a number of European countries and growth very sluggish. Youth unemployment is also at record levels. For example, overall unemployment is at 28 % in Spain and youth unemployment at 56.4 %; 10.5 % in France youth rate 24.3 %; U.K. 7.9% youth 21.0 %; and 27 % in Greece, youth rate 62.5 %. The youth rate is 62.5 % in Italy; 30.4 % in Ireland 42.5 % in Portugal and 23.7 % in Sweden. The overall unemployment rate is 12.2 % in the Eurozone and youth unemployment in the EU27 22.8 %(All data courtesy of Eurostat) .These are horribly elevated rates of unemployment which contribute to unnecessary misery, waste of human potential, lost output and social instability.Germany, Austria and the Netherlands are doing much better. Youth unemployment in Germany is 7.5 %, 8% in Austria and 10.7 % in the Netherlands.
By contrast unemployment continues to fall albeit slowly in the U.S. where the Fed has pursued a much more stimulative policy with a substantial program of QE and prior to the blockade of stimulus in the US congress the President and Congress had implemented a significant, if not quite large enough stimulus. The contrast with Europe both in terms of policy and results is large. I keep hoping that Europe will mend its ways before its too late but unfortunately things are not as promising in Europe at the moment.