Record unemployment hits eurozone

Unemployment across the 17 European Union countries that use the euro hit another record high in April - and appears to be on course to hit 20 million this year in what would be another gloomy landmark for the currency bloc.

Eurostat, the EU's statistics office, said on Friday that the unemployment rate rose to 12.2% in April from the previous record of 12.1% the month before. In 2008, before the worst of the financial crisis, it was around 7.5%.

A net 95,000 people joined the ranks of the unemployed, taking the total to 19.38 million. At that pace, unemployment in the currency bloc - which has a population of about 330 million - could breach the 20 million mark by the end of the year.

Eurozone economies have been suffering because their governments are trying to improve public finances through aggressive spending cuts and tax increases. The problem is they've done it at a time when much of the private sector has been unable to plug the gap in activity left by the retreating state, unlike in the US, which has opted for a more gradual approach to debt reduction. The unemployment figures mask big disparities among the euro countries. While over one in four people are unemployed in Greece and Spain, Germany's rate is stable at a low 5.4%.

The differences are particularly stark when looking at the rates of youth unemployment. While Germany's youth unemployment stands at a relatively benign 7.5%, well over half of people aged 16 to 25 in Greece and Spain are jobless. Italy's unemployment rate hit its highest level in at least 36 years to over 40%. "Youth joblessness at these levels risks permanently entrenched unemployment, lowering the rate of sustainable growth in the future," said Tom Rogers, senior economic adviser at Ernst & Young.

The differences reflect the varying performance of the euro economies - Greece, for example, is in its sixth year of a savage recession. Germany's economy has until recently been growing at a healthy pace. Private consumption saved Germany from slipping into recession in the first three months of this year, data showed. As a whole, the eurozone is in its longest recession since the euro was launched in 1999. The six quarters of economic decline is longer even than the recession that followed the financial crisis of 2008, though it's not as deep. By contrast the US economy has been growing steadily since the end of its recession in June 2009 and the jobs market has started to improve, with the unemployment rate falling to 7.5% in April.