The eurozone is poised for an historic achievement, and it didn’t even need a fiscal cliff, sequester or irresponsible government-by-brinksmanship to do it.
The euro-area economy will shrink in back-to-back years for the first time, driving unemployment higher as governments, consumers and companies curb spending, the European Commission said.
Gross domestic product in the 17-nation region will fall 0.3 percent this year, compared with a November prediction of 0.1 percent growth, the Brussels-based commission forecast today. Unemployment will climb to 12.2 percent, up from the previous estimate of 11.8 percent and 11.4 percent last year.
How have they reached such a remarkable milestone? Paul Krugman would, no doubt, blame austerity. The European Commission seems inclined to agree.
The European Commission, the EU’s executive arm, forecasts a 0.3% contraction for 2013 and sees falling spending by businesses, consumers and national governments pushing euro-zone unemployment to a new high. Mass joblessness is expected to increase in the countries hardest hit by the crisis, with the average unemployment rate expected to reach 27% in Greece, 26.9% in Spain and 17.3% in Portugal.
But Olli Rehn, the guy at the EC who’s in charge of this mess—insofar as anyone at the EC is in charge of anything—won’t be brought low by facts, figures or failure. No sir. You’ve just got to sift through the shit to find the occasional (German) pearl.
While “hard data” has been disappointing, there also has been more encouraging “soft data” that points to better times, he told reporters today.
EU Says Euro Area to Shrink in 2013 as Unemployment Rises [Bloomberg]
Euro-Zone Economy to Shrink in 2013 [WSJ]
Euro zone economy to shrink again in 2013, EU says [Reuters]
Germany Powers Ahead of Euro-Zone Neighbors [WSJ]