The eurozone unemployment rate hit a new record of 11.8% in November. In Greece and Spain, the rate is over 26%. Spain's youth unemployment rate is a staggering 56.5%.
A composite survey tracking activity in the eurozone's manufacturing and services sectors rose for a second successive month in December, but still reflects a shrinking economy. German export data in November were worse than expected. But Ireland managed to sell €2.5bn of five-year debt as it gradually regains access to the markets.
It wasn't a good week for the European Commission's president Jos Manuel Barroso to claim that the existential threat to the euro has been overcome, noted Ian King in The Times. The odds of a country defaulting have fallen because the European Central Bank has said it will buy a troubled country's debt in unlimited quantities. But "yesterday's genuinely shocking jobless figures pose a whole new threat". If the southern states run out of patience with austerity, they could elect parties who would quit the euro.
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Unable to let their currencies fall or lower interest rates to temper the downturn, most peripheral states seem trapped in a spiral: austerity simply weakens the economy further, causing more debt to pile up. It's hard to see the southern European democracies tolerating "slow grinding depression, year after year", said Ambrose Evans-Pritchard on Telegraph.co.uk, with no sign that "the pain is ultimately worthwhile".
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Note too that, in Spain's case, the spat between Catalonia's independence movement and Madrid adds "nitroglycerine [to] political upheaval".
For now, the crisis has cooled as bond yields have fallen. But "the odds of another round of panic will remain distressingly high", says Economist.com.
Enter Italy's former prime minister Silvio Berlusconi, attempting to return to power on a populist, anti-Europe platform. Expect a fragmented parliament "with little appetite for reform" after February's election, says sovereign debt analyst Nicholas Spiro.
That seems likely to renew concern over Italy's ability to grow faster in future and thus make a dent in its debt pile. Both Spain and Italy are on track to miss their deficit targets for 2012, said Capital Economics. And Greece is a constant worry. Don't expect European policymakers' current breathing space to last for very long.
