LONDON – Unemployment in the 17-country eurozone hit a record high of 11.6 percent in September, official figures showed Wednesday, a sign the economy is deteriorating as governments struggle to get a grip on their three-year debt crisis. The rate reported by Eurostat, the EU's statistics office, was up from an upwardly-revised 11.5 percent in August. In total, 18.49 million people were out of work in the eurozone in September, up 146,000 on the previous month, the biggest increase in three months. While the eurozone's unemployment rate has been rising steadily for the past year as the economy struggled with a financial crisis and government spending cuts, the United States has seen its equivalent rate fall to 7.8 percent. Five countries in the eurozone are already in recession — Greece, Spain, Italy, Portugal, and Cyprus — and others are expected to join them soon. The region as a whole is expected to be confirmed to be in recession when the first estimate of eurozone economic activity in the third quarter is published mid-November — a recession is officially confirmed after two consecutive quarters of negative growth. Recession and unemployment make it more difficult for the eurozone to deal with its debt problem — governments need to pay more benefits to the jobless and receive fewer tax revenues. That could push countries to take even more austerity measures, which in turn weighs on economic activity. Once again, Spain held the ignominious position of having the highest unemployment rate in the eurozone, at 25.8 percent. The Greek recession will be even worse than expected next year, according to a draft budget tabled in parliament Wednesday. The country – which risks running out of money in two weeks – will run a bigger public deficit than forecast a month ago in a previous draft and the economy is expected to shrink by 4.5 percent in 2013, compared with the previous forecast of 3.8 percent. The new forecast nonetheless predicted that Greece's recession would ease next year, with the forecast for 2012 being that the economy will shrink by 6.6 percent. The government intends to economize nearly 9.4 billion euros ($12.2 billion) next year – compared to a target of 7.8 billion a month ago – with a new cut to state wages, pensions and benefits. Greece plans to save nearly 4.7 billion euros from pension pay, 1.2 billion euros in civil service salaries and 455 million euros in healthcare. Overall, state expenses are to be reduced by 33.9 percent in a year. The document also foresees an annual average unemployment rate of 22.8 percent, a slight dip from the latest measurement of 25.1 percent in July. The latest forecasts were released as the coalition government faced its first test in parliament to secure the approval of a law to facilitate a long-delayed privatization drive that is part of its bailout obligations. Greece plans to raise 2.5 billion euros in asset sales in 2013 according to the budget. But with the economy still in a deep trough, the state's tax revenue is in a steady decline. – Agencies
