EU-17 unemployment reaches record 11.2%

The average jobless rate in June in the 17 nations using the euro reached a record 11.2 per cent. This is the highest level since the data started being compiled in 1995.

The deepening debt crisis and economic recession throughout the euro area are forcing companies to cut jobs. In an attempt to counter this financial turmoil, policy makers are considering measures to stimulate weakening economies and pursuing the preservation of the euro.

Investors are urging the European Central Bank (ECB) to help the euro survive by buying sovereign bonds of distressed countries, such as Spain and Italy.

But on Thursday, ECB president Mario Draghi disappointed the markets by failing to deliver concrete proposals on how to avoid a break-up of the single currency.

The ECB avoided cutting interest rates as it is being pressured to reduce bond yields to protect the euro. However, Germany’s central bank, the Bundesbank, may oppose such a move.

In the UK, home prices in July fell for the first time this year. According to Hometrack Ltd, a British property research company, prices may fall further as the worsening recession curtails demand for homes. Compared to the previous month, home prices in July slipped by 0.1 per cent.

In the meantime, during its latest meeting, the Bank of England’s rate-setting Monetary Policy Committee held its key interest rate at a record low of 0.5 per cent.

It also maintained its current £375 billion bond-buying programme, as it assesses the impact of the latest stimulus.

Finally, in the US, the Federal Reserve (Fed) left its benchmark interest rates unchanged at 0 to 0.25 per cent.

Fed chairman Ben Bernanke said that if necessary the central bank will provide additional stimulus to enhance economic expansion.

Weakening economic growth and a high unemployment rate have induced the Fed to take action.

This article was compiled by Bank of Valletta for general information purposes only.