Italy's voters gave their verdict on the austerity medicine they've been forced to take when they went to the polls earlier this week. By Friday, one of the reasons behind the protest was highlighted when the country's unemployment hit its highest level in at least two decades.
Official figures Friday showed that unemployment in the country in January rose to 11.7 percent from the previous month's 11.3 percent. January's figure was the highest since the current way of measuring unemployment was introduced in 1992.
The unexpectedly large monthly spike was one of the key backdrops to the election results earlier this week that reignited concerns over Europe's dormant debt crisis. No party, or coalition of parties, emerged with enough votes to govern alone, triggering uncertainty in the markets about the future course of Italian economic policy.
The rise in the Italian rate, which comes as the country is stuck in an 18-month recession and after a wave of economic reforms and tight budgetary controls introduced to control the country's debt, was also the main reason why unemployment across the 17 European Union countries that use the euro rose to a record 11.9 percent during January from the previous month's 11.8 percent.
Even more dramatic is the rise in the level of youth unemployment for the eurozone to 24.2 percent, which raises the risk of removing a whole generation from the labor force.
Eurostat, the EU's statistics office, said nearly 19 million people were unemployed in the eurozone following an increase of around 200,000 in January.
The increase was not a particular surprise given that the eurozone economy as a whole is in recession and expected to continue to contract in the first half of 2013. In the final three months of 2012, the eurozone contracted by a quarterly rate of 0.6 percent, with eight countries in recession — officially defined as two straight quarters of negative growth.
Last week, the European Commission, the EU's executive arm, forecast that that the eurozone unemployment rate was likely to rise further this year and average around 12.2 percent for the year as a whole.
Even if growth does emerge in the eurozone, as some recent economic indicators have suggested, it usually takes time for unemployment to start falling — it is widely considered to be a lagging indicator. And high levels of unemployment make it even more difficult for economies to recover and for governments to get their public finances into shape.
Even though concern in the financial markets over the eurozone's problems of too much government debt has calmed recently, there appears to be a rising groundswell among people against austerity, which has been prescribed as the main cure. The inconclusive Italian elections were just the latest manifestation of that protest — others include regular protests in Spain and Portugal, as well as the rise of right-wing extremists in Greece.
"High and still rising unemployment rates are probably the single most important threat to the mid to long-term economic stability of the eurozone," said Marie Diron, senior economic adviser at Ernst & Young. "As electorates fail to see the benefits of fiscal and economic reforms, we could see rising social tensions weakening governments and raising the possibility of a popular vote to exit the euro. In this context, it is essential to emphasize growth-enhancing reforms."
The overall unemployment rate masks huge divergences across the eurozone.
While Greece and Spain languish under the weight of mass unemployment of over 25 percent, many of the northern economies are operating with relatively low levels around the 5 percent mark. Germany's jobless rate stands at only 5.3 percent, while Austria's is only 4.9 percent even after a second straight monthly rise.
Though a marked change in austerity is unlikely to be welcomed in financial markets, let alone in Berlin or Brussels, those Europeans unable to find work may get some relief if a reported fall in inflation prompts the European Central Bank to cut interest rates again.
The statistics agency said consumer prices rose 1.8 percent in the year to February, down from the previous month's 2 percent and expectations for a fall to 1.9 percent.
It also takes inflation below the European Central Bank's mandated target of just below 2 percent for the first time since November 2010 and to its lowest level since August of the same year.
Analysts said the fall may prompt the bank to cut its benchmark rate from the record 0.75 percent as soon as next week. A cut would could make it cheaper for businesses and families to borrow, spend and invest — thereby generating growth in the economy.
"The lack of price pressures should leave the ECB's policy options open," said Jennifer McKeown, senior European economist at Capital Economics. "We think that the Bank might discuss an interest rate cut or other unconventional policies at next week's meeting."
The euro, which has been under pressure for most of this week, edged down below $1.30 for the first time in nearly two months amid expectations of a potential rate cut from the ECB. It was trading 0.5 percent lower at $1.2999.