Deep recession continues in EU

Greece, Spain and Ireland are still among the worst affected by the world’s economic recession, which started over a year ago.

Greece’s manufacturing sector is weakening, unemployment in Spain has reached 19 per cent and Ireland is now facing a €1bn bill to pay for university students.

Greece

A survey earlier this week revealed that Greece’s financial crisis will last longer and deeper than had previously been predicted.

The effects of the squeeze on government finances are spreading fast and one proof of this is the growing weakness in manufacturing.

“The discussion about new extra measures on wages and salaries has already affected consumer and business sentiment,” Gikas Hardouvelis, chief economist at Eurobank EFG in Athens told the Financial Times.

Spain

Unemployment in Spain has reached 19 per cent after its recession began with the collapse of the housing market that spread to other sectors. The construction sector, which for years was the country’s main engine for economic growth, shed more jobs making over four million jobless.

Investors and markets fear that Spain could follow Greece in a similar debt crisis.

Although the government has admitted the economy relied too much on the construction sector, President Jose Luis Rodriguez Zapatero announced earlier this week he wanted to reactivate the construction sector in a wider economic recovery plan.

But the number of people who have lost their jobs in the last two months was just over half of the number compared to last year. “The labour market adjustment continues, though at a much lower rate than last year, when in annual terms unemployment rose 50.3 per cent [compared with 20 per cent this time],” Maravillas Rojo, the secretary general for employment, told the Financial Times.

Ireland

Ireland is facing a deepening recession after the government announced a €1bn (£906m) bill to pay for an unexpected increased number in university students.

The number of students in higher education could rise from 155,100 to 215,900 in just ten years putting a huge strain on taxpayers who are already spending €1.8bn (£1.6bn) in education each year.

The Department of Finance has conceded that the demand for higher education could be due to the recession.

Irish Bank AIB announced it will raise mortgage rates by 0.5 per cent before the summer after revealing it lost €2.3bn last year.