52. The Euro Crisis

In the search of a good source (since we cannot use the Globe any more) I found a very useful set of data at the BBC website. It provides data on GDP growth, unemployment rate, deficit and debt for Euro-zone countries and the UK since 1999.

You should look at the data and play with the interactive graphics. I did, and here are some observations:

1. Unemployment: compare Germany with Spain and with Greece. The unemployment rate in Greece was lower than in Germany as late as in the second quarter 2008, the unemployment rate in Spain was lower than in Germany in the third quarter of 2007. Then the paths diverged. Since the third quarter of 2007 the unemploymnet rate in Germany fell by 3%; the unemployment rate in Greece and in Spain increased by over 15%.

2. In some European countries the Great Recession had little effect on the unemployment rate. Look at the graphs for Austria, Belgium, Germany and the Netherlands. At the other end are Slovakia and especially Estonia, where unemployment increased a lot, but started falling quickly.

3. The five countries that received EU help (Cyprus, Greece, Ireland, Portugal and Spain) all recorded very high increases in unemployment. Ireland seems to be past the worst period; the others are not.

4. The last time any country had a budget surplus  was in 2008; since then every country except Estonia has been running a deficit. Deficits in some countries are absurd. The Irish government guaranteed bank debt and had a deficit of over 30% in 2010. Greece, Spain and UK seem to be basket cases.

5. Under the Maastricht treaty that created the Euro, debt to GDP ratio should be under 60%. Belgium, Greece and Italy have never reached that limit. In most countries it is now above 60%

6. Finally, look at two countries that are in good shape: Finland and Estonia. They have no debt or deficit problem. Estonia went through a wrenching recession but recovered remarkably well. Two years ago its unemployment rate was the highest after Spain; now it is less than a half of Spanish rate. Finland also went through a deep recession. Note that both countries have relatively high rates of unemployment.