Dire unemployment rate adds to interest rate cut pressures

The dire unemployment figures were published as the spotlight again turned on the European Commission's economic response to the economic crisis, with newly elected Italian prime minister, Enrico Letta, pledging to pursue pro-growth discussions at meetings in Berlin, Paris and Brussels this week.

"We will die of fiscal consolidation alone. Growth policies cannot wait any longer," the newly elected prime minister said in his first speech to parliament on Monday, even as he appeared to confirm his commitment to the fiscal consolidation path initiated by his predecessor Mario Monti.

"In Europe and internationally, Italy will find strategies to boost growth without compromising the necessary process of restructuring of public finances," Mr Letta said.

Deficit reduction
The European Commission insisted that Italy would remain committed to its deficit reduction targets. "The targets, the objectives remain those that have been agreed," a commission spokesman said yesterday in Brussels, but the effect of EU-prescribed fiscal consolidation measures is likely to be discussed at a breakfast meeting between the newly elected prime minister and European Commission president José Manuel Barroso in Brussels tomorrow.

Youth unemployment
As Mr Letta received final sign-off for his appointment as prime minister from the Italian senate, new figures from Eurostat, the EU's official statistics agency, showed unemployment in the 17 countries that share the single currency climbed to 12.1 per cent in March, up from 12 per cent the previous month, with youth unemployment continuing to rise .

The 12. 1 per cent unemployment rate compares to a figure of 11 per cent in March 2012. Across all 27 EU member states unemployment stood at 10.9 per cent in March. As with previous months, the unemployment figures were heavily skewed towards those in the under-25 age-bracket. Youth unemployment in the euro zone stood at 24 per cent at the end of March, while the percentage of young people unemployed was only slightly lower on average in the entire EU at 23.5 per cent.

Greece, Spain and Portugal continued to experience the highest unemployment rates in Europe, with rates rising to 27.2 per cent, 26.7 per cent and 17.5 per cent respectively.

Ireland’s unemployment rate fell from 15 per cent to 14.1 per cent between January 2012 and January 2013, Eurostat noted, though the unemployment rate of 14.1 per cent remains in line with the previous month.