EU Fears Jobless Rate Is Headed Up To 10%

The European Union's unemployment rate is headed toward 10%, but its governments see no immediate need for further fiscal-stimulus measures, European Commission President Jose Manuel Barroso said Tuesday. The forecast, along with an array of negative production and employment indicators, came amid news from Germany of a mild improvement in investor sentiment. 'Unemployment is my main concern,' Mr. Barroso told an economic conference in Brussels. 'The employment market is getting worse and worse.' The unemployment rate in the 27-country EU had dipped below 7% in 2008 but rose to 7.6% in January this year. Spain reported the bloc's highest unemployment rate -- 14.8% in January -- while the Netherlands had the lowest at 2.8%, according to Eurostat, the EU's statistics agency. BusinessEurope, the EU's main business lobby, last week said it expects the bloc to shed 4.5 million jobs this year. Slovakia, which this year became the 16th country to use the euro, reported its highest level of unemployment in more than two years, as the jobless rate in February rose to 9.7%, from 9% in January. Finance Minister Jan Pociatek also ruled out increasing Slovakia's 332 million euro ($430.2 million) stimulus package -- 75% of which already has been spent. Mr. Barroso said that the bloc needs the right economic conditions to spark a recovery, and that the smooth flow of credit to companies and a stable euro are key. His comments show policy makers are concerned that the recession will be deeper and longer than forecast just a few months ago. Still, they resist pressure from the Obama administration to pump more funds into their economies. Mr. Barroso said the consensus in the EU is that current efforts to help the economy are sufficient. 'It would be unwise to start talking about other plans before we start implementing the plans we already have,' he said. EU states in December agreed to a 200 billion euro fiscal-stimulus plan. The U.S. launched a $787 billion fiscal-stimulus package last month. Meanwhile, Germany's ZEW think tank offered some optimism. Its March investors survey found most respondents seeing an end to economic contraction this summer. ZEW's expectations index for the six months ahead was minus 3.5, up from minus 5.8 in February, marking the fifth straight improvement. Experts' assessments for current conditions, however, continued to deteriorate, averaging minus 89.4, compared with minus 86.2 points in February. Switzerland, which isn't a member of the EU, is looking at its worst recession since 1975, the government said. Swiss GDP will likely contract 2.2% in 2009 amid a 0.2% fall in consumer prices. In 2010, the growth rate is set to be positive again, but will remain at 0.1%, while consumer prices are expected to advance 1%, according to an estimate by the government agency Seco. The jobless rate, estimated at 3.8% this year, will likely rise to 5.2% in 2010, it added. Martin Gelnar, Roman Kessler and Nina Koeppen contributed to this article. Adam Cohen