Europe feels chill of 10 per cent unemployment

(BRUSSELS) - Unemployment hit 10 percent in Europe on Friday, amid rising inflation and a weakened euro currency according to new data that shows recession-mired Spain bearing the brunt of a jobless recovery.

The human cost of post-recession, structural economic rebirth could be seen in updated European Union data when the seasonally-adjusted unemployment rate for the 16 euro countries hit a miserable one in 10 in December.

The news came on top of rising inflation -- with separate official figures showing the annual rate of price rises hitting 1.0 percent, a new peak after falling to an all-time low of minus 0.7 percent six months earlier.

The rising prices also come at a time when the euro is losing ground against the dollar -- with the European currency's value having slipped considerably from a November peak of 1.50 dollars to currently trade at under 1.40 dollars.

An estimated 87,000 additional people tumbled out of work in the last weeks before Christmas, according to the EU's Eurostat agency.

That may have been down from the 102,000 people who joined benefit queues in November -- but it still took the total number of unemployed people across the 16 countries that share the euro to 15.763 million.

The 10 percent rate was the highest since the currency was launched a decade ago and up from a downwardly-revised 9.9 percent in November.

Official figures published earlier this month had prematurely pegged the November eurozone rate at 10 percent.

Across the 27-nation EU, December's rate was only a smidgeon behind at 9.6 percent, up from 9.5 percent and corresponding to 163,000 more people unemployed.

More than 23 million people were calculated to be out of work across the world's biggest open trading bloc.

That meant that in the last year, 4.628 million people joined the ranks of the jobless across the EU, which also includes non-euro Britain, which only exited recession this week, and eastern industrial powerhouse Poland.

Some 2.787 million of those were in the core euro area.

Spain's unemployment rate hit a massive 19.5 percent, albeit only slightly up from the previous month.

Separate data from Madrid showed that the rate in Europe's fifth-largest economy -- ravaged by a radical contraction after a lengthy property, construction and tourism boom -- soared to 18.83 percent throughout the fourth quarter of 2009.

A total of 4.326 million people were out of work in Spain throughout that longer period, up more than one million from a year ago.

Experts have repeatedly expressed fears of a "double-dip" recession on the Iberian peninsula -- which is also struggling with a Greek-style public deficit way above EU targets.

"Although the rise in eurozone unemployment has slowed in recent months, it still seems poised to trend higher during much, if not all, of 2010," warned analyst Howard Archer of IHS Global Insight.

The "good news" was that it was the smallest rise since May 2008, but he warned that the wider psychological impact is "likely to hold down wage growth and limit the upside for consumer spending."

All told, the signs were that the European Central Bank will keep interest rates down at 1.0 percent until "at least late-2010," he concluded.

December 2009 Euro area unemployment rate up to 10.0% EU27 up to 9.6% [Eurostat]