Unemployment in the Eurozone hit yet another record in November, clearing 11.8 percent, according to Eurostat. 18.8 million residents of the Eurozone are out of work, the most since the single currency was created in 1999. Across all of Europe, 26 million citizens are jobless.
As the Associated Press noted, “governments across Europe have introduced tough austerity measures, such as slashing spending and raising taxes. However, measures such as cutting wages and pensions hit the labor force in the pocket and reduce demand in the economy.” Austerity measures have also driven the U.K. to the brink of a triple-dip recession. And the U.S. is scheduled to enact an austerity package larger than that passed in many European countries, if spending cuts that are on the books actually take effect, as this chart shows:
The International Monetary Fund recently admitted that it vastly underestimated the detrimental effects austerity would have on world economies. Europe is providing a prime example of the consequences of that mistake.
The U.S. came out of its economic slump faster than Europe due, in part, to its embrace of stimulus over austerity. But recent budget deals have the potential to reverse those gains.