Britannia Radio

The news from the continent is not much better than here!    Unemployment will continue its rise and meanwhile the Baltic countries are suffering.  Take Latvia which is the worst case where unemployment is up 172%  and where  successive wage cuts of 15% and then 20% will cripple most people’s life styles . 

Christina

EU OBSERVER 3.7.09

Gloomy job figures dash hopes for European upturn

LUCIA KUBOSOVA

As fresh statistics in both Europe and the US dash hopes for an early economic recovery, Brussels is proposing micro loans to small firms in a bid to help them keep local jobs.

According to data published by Eurostat, the EU's statistical office, on Thursday (2 July), the jobless rate in the eurozone was 9.5 percent in May, up from 9.3 percent in April. It is the highest rate since May 1999 and it involves around 15 million men and women.

Meanwhile, the unemployment rate across the bloc was 8.9 percent in May, a four year high. The number of jobless persons increased by 385,000 compared to the previous month and by 5.1 million since May 2008.

Altogether, it is expected that some 3.5 million jobs will be lost this year across the EU.

Spain continues to feature as the member state with the highest unemployment rate, while the Netherlands recorded the lowest rates (3.2%) and, along with Germany, the lowest surge of the number of unemployed compared to last year.

While all the EU countries recorded some increases, the three Baltic states saw the biggest jump in jobless figures, with Estonia's unemployment rate surging from around 4 to 15.6 percent, Latvia's from 6 percent to 16.3 percent and Lithuania's from 5 percent to 14.3 percent.

A similar set of gloomy statistics came from the US on Wednesday, as June figures showed that the unemployment rate in the world's biggest economy rose from 9.4 percent to 9.5 percent, its highest for nearly 26 years, the Financial Times reported.  [- - - - - - - - - - -] 

Economists argue that the latest signals from the labour market on both sides of the Atlantic cast a shadow over optimistic expectations for the world's worst economic recession since the 1930s to be nearing its final phase

2. Commission approves second slice of Latvian loan

ANDREW WILLIS

 BRUSSELS - The European Commission announced on Thursday (2 July) its intention to release the second tranche of an EU loan agreed with Latvia last year, while at the same time calling on the small Baltic state to put its public finances in order by 2012.

The disbursement of the €1.2 billion sum will come later this month once the commission has had time to raise the funding on international markets, something it can do at a much lower rate than Latvia due to its higher credit standing.

The loan is part of a wider €7.5 billion package agreed between Latvia and the EU, the International Monetary Fund and other lenders last December.

"Latvia is going though a very painful adjustment, but the EU is providing considerable support with a balance of payments loan that is the biggest part of the international financial assistance," said economy commissioner Joaquin Almunia.

Last month the Latvian parliament approved government proposals to claw back 500 million lats (€700m) from this year's budget, the third announcement of its kind in 2009.

Earlier budget adjustments resulted in a 15 percent reduction in public wages, followed by a further 20 percent reduction.

"The correction of the large budgetary and macro-economic imbalances will put the country on the road to the euro and to sustainable growth conducive to employment creation," said Mr Almunia.

Aspirations of joining the euro area have stopped a number of countries in the region from devaluing their currencies, a measure occasionally used to boost exports by making prices more competitive.

2012 deadline

On Thursday the commission also made recommendations under the excessive deficit procedure to the council [representing member states] regarding Latvia.

The recommendations call on Latvia to bring its budget deficit below 3 percent by 2012, a timetable that the commission said was consistent with the country's economic and budgetary adjustments and plans for joining the euro.

EU guidelines on member state finances that limit government deficits to 3 percent of their GDP - known as the Stability and Growth Pact - have come in for a hammering over the last year due to stimulus spending and falling tax receipts across the union.

However, excessive expenditure by Latvian governments during the recent boom years and the high level of private sector debts in foreign currency have made the small Baltic state particularly vulnerable to a global downturn and leave it will little room for manoeuvre at present.