European Unemployment

February 3rd, 2009 | economics -

Unemployment in many European countries is forecast to rise due to the credit crunch and global recession. The EU forecast that Spain will be amongst the worst hit, with unemployment forecast to rise to 18% by 2010.

As well as demand deficit (cyclical) unemployment, Europe is struggling with persistent structural unemployment. High natural rates of unemployment have been blamed on:

Inflexible labour markets
Generous unemployment benefits which encourage frictional unemployment.
Geographical immobilities
Strong labour market regulations which discourages firms from investing and taking on new workers.