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Friday, August 2, 2013

Signs Of A Muted Recovery In Europe

People queue up outside an unemployment registry office in Madrid, Spain, Tuesday, June 4, 2013. (Daniel Ochoa de Olza/AP)

People queue up outside an unemployment registry office in Madrid, Spain, Tuesday, June 4, 2013. (Daniel Ochoa de Olza/AP)

The number of people without jobs in Europe fell for the first time in more than two years in June, but the overall unemployment rate of 12.1 percent is still a record high.

Among young people in countries like Spain, it’s near 60 percent.

But things are much better in Germany, where the jobless rate is just 5 percent. And that means Germany is a destination for people who can’t find jobs in countries like Spain and Greece.


  • Damien McGuinness, correspondent for the BBC in Berlin, Germany.
  • Guy Hedgecoe, correspondent for the BBC in Madrid, Spain. He tweets @Hedgecoe.



Let's turn from the jobs picture here in the U.S. to what is going on in Europe, where we learned this week that the number of people without jobs fell for the first time in more than two years in the month of June, a welcome bit of good news for a continent that has remained in recession even as the U.S. has climbed out. So is there a light at the end of the tunnel for Europe and the European debt crisis?

For answers we're joined by the BBC's Damien McGuinness in Berlin, and the BBC's Guy Hedgecoe in Madrid. Welcome to both of you.

DAMIEN MCGUINNESS: Thank you, good to be here.

GUY HEDGECOE: Thank you, Jeremy. Hi there.

HOBSON: Well, Guy, let's start with you. Spain's unemployment rate famously is up at 26 percent, even despite some good news this week in the eurozone in general. What is the feeling in Spain, that things are getting better now?

HEDGECOE: People are still very pessimistic, even though there has been some relatively good news recently overall in the eurozone. And also, you know, the unemployment rate in Spain itself has seemed to start to come under control recently. We've seen some relatively healthy figures. But still unemployment is at 26 percent, over 26 percent, and Spain also has an extremely acute problem with youth unemployment, people under the age of 25.

The youth unemployment rate is over 50 percent. And I've spoken to a lot of young Spaniards who are either thinking of going abroad or have gone abroad already. One young lady, Adriana Jimeno(ph), who's in her early 30s, and she's a psychologist, she speaks English, she speaks Portuguese as well as Spanish, she's extremely highly trained, and she told me how difficult the situation is for someone in her position.

ADRIANA JIMENO: The situation is very difficult, and finding a job nowadays is very, very hard. And the hardest part of that is that when I look to the future, I know I'm not going to find anything in my area until five years.

HOBSON: So a lot pessimism still in Spain. Damien, what about you in Berlin? How are people feeling there about the economy? Things obviously in Germany much, much better than in Spain.

MCGUINNESS: Yes, it's a very different picture here, Jeremy. The crisis really hasn't hit Germany at all, in fact. Germany feels more buoyant and optimistic than it has done for decades. Unemployment is down to record lows of around five percent. Youth unemployment is among the lowest in Europe at around seven percent, and consumer spending this month was higher than it's been for years.

And here in Berlin you can almost see visible proof of the economic success of Germany because there are cranes and building sites everywhere. And house prices have even surged. So the real estate market is even doing very well. There is a worry among many German voters, however, the crisis might hit Germany at some point or at least that the problems in Southern Europe are possibly slowing down the recovery.

And of course Germany is very reliant on exports. So if there was a slowdown, for example in China, that would be very bad news for Germany, but so far the economic mood is extremely positive here.

HOBSON: And there is an election coming up in September. This has been a big topic of conversation, that Angela Merkel, the chancellor, has to sort of balance wanting to keep the euro together and wanting to keep Germans happy that they're not bailing out all the rest of the countries in Europe and giving away too much of their money.

MCGUINNESS: Yes, that's right, and that's a very difficult balancing act. But Angela Merkel has very good political instincts, and she's holding back from anything that would hit Germany - German voters in the pocket. So most of the tough news that German voters might face is going to come after the elections. That's a given.

But also there is an understanding among German voters that there's a need to help out Southern Europe. There isn't really much resentment against bailouts for Southern Europe. What there is in Germany is almost puzzlement and a lack of understanding as to why there is not more willingness in the South to push through more, more reforms, because Germany itself went through very painful reforms 10 years ago when unemployment benefits were slashed, other welfare benefits were cut drastically.

Wages here for most people haven't risen for years, and most Germans have a lot less real wealth than many people in Southern Europe. For example, home ownership here is very low. So for some people in Germany, they're a bit puzzled why Southern Europeans can't do the same as what Germans did 10 years ago in these reforms and also 20 years ago when there was reunification here of West and East Germany, and that was also very painful.

So there is somehow a lack of comprehension because the problem is that what comes across in Southern Europe as bullying is sometimes seen here in Germany as a constructive way to help bail out Southern Europe and get their economies back on track in the same way that Germany already has done.

HOBSON: Well, Guy Hedgecoe in Madrid, what is it? Is it seen as bullying, or is it seen as a constructive effort to get things back on track?

HEDGECOE: I think it's a combination in a way because Spaniards do look at Germany as something of a sort of El Dorado, to use the cliche, because there are many Spaniards who are heading to Northern Europe, and Germany in particular is a destination that they want to go to. They see it as a country which has a health economy and which has handled its finances well.

Last year, 30,000 Spaniards headed to Germany to try and find work. But there is resentment as well. I mean a lot of Spaniards feel that their prime minister, Mariano Rajoy, is simply receiving orders not just from the EU but specifically from Angela Merkel, and that all these reforms and austerity measures that Spaniards are going through, they're coming as orders from the north of Europe rather than with true conviction necessarily from Spain's own leaders.

And people here are very, they're very attached to their welfare state. They see it as a real sort of symbol of Spain's development since the country emerged from the right-wing dictatorship in the late '70s, when the dictator Franco died. And they feel that, you know, a healthy welfare state, health care system and education, you know, good pensions, these are all things that are legacies of Spain's development into the 21st century.

HOBSON: Guy, one last thing. We've heard a lot over the course of this crisis, which has now been going on for years, about whether the euro will indeed stay together and whether it can stay together. Are you hearing from people in Spain right now who are worried that the euro will not stay together, or is that concern gone?

HEDGECOE: I think that concern has - it's disappeared to a great extent. People aren't talking in those terms nearly as much as they were, say, a year ago. You know, exactly a year ago, Spain was in real trouble with the markets. The markets were punishing the country and giving it a really hard time. And there was a lot of talk that Spain was going to require a sovereign bailout from the rest of Europe.

Spain at the moment is in a rather more healthy state, at least in the sense of how the market is treating it.

HOBSON: And Damien McGuinness, back to you in Berlin, what about the mood there in Germany? Is there a sense that there is still a risk that the euro will not be able to stay together? We saw just earlier this year that Cyprus almost had to leave. What's the sense now?

MCGUINNESS: Well, Germany is one of the most pro-European countries in Europe. Traditionally Germans are very much pro-EU institutions. They see it as a - as part of the country's identity, strangely enough, because integration with the rest of Europe is a way of moving away from the country's traumatic Nazi past and the painful memories of the Second World War.

And Germans are very aware of that, and I think there was talk about six months ago of a political move towards breaking away from the Southern European countries, and there was a - there's a party been established called Alternative for Germany, which is very much an anti-euro, anti-EU party. And it's just vanishing in the polls. It hasn't got any support at all.

So we're just seeing really that, you know, the country is doing well economically, and Germans just don't want to rock the boat, and what they want really is to help Southern Europe get its economic act together, which in turn people here think will help Germany economically.

HOBSON: Two views of the situation in Europe from Damien McGuinness of the BBC, he's in Berlin; and Guy Hedgecoe of the BBC, who is in Madrid. Guys, thanks to both of you.

MCGUINNESS: Thank you, Jeremy.

HEDGECOE: Thanks very much, Jeremy.

HOBSON: And the news is next, HERE AND NOW. Transcript provided by NPR, Copyright NPR.

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Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

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