Unemployment up and inflation down in the eurozone

ECB rate cuts expected

The latest unemployment figures in the Eurozone are really, really bad. In fact, they are – again – the worst they've ever been:

That's an average unemployment rate of 12.1 per cent in the eurozone (and 10.9 per cent in the wider EU). But that high rate disguises enormous disparities: unemployment in Greece is 27.2 per cent; unemployment in Spain is 26.7 per cent; but in Austria, just 4.7 per cent of people looking for work can't find it, and in Germany it's only 5.4 per cent.

At the same time, inflation in the eurozone has been plummeting. In the latest quarterly data, the all-items index is estimated to have grown by just 1.2 per cent over the year – well below the 1.6 per cent which was predicted.

That offers a ray of hope for the continent. Unlike the (claimed) British plan of fiscal restraint and monetary activism, Europe has experienced crippling austerity without any major monetary policy designed to ease the burden. Typically, that reluctance is ascribed to the stereotypical German fear of inflation. Regardless of whether or not the blame truly lies at the feet of Germany – and whether the fear of inflation is just a hangover from the harrowing experience of hyperinflation in the 1920s, or something more concrete – the ECB is an exceptionally inflation-averse central bank.

All eyes will be on the bank later this week, then, as it announces whether or not it will be cutting rates for the first time in almost a year. It's bumping against the lower bound, since the bank already pays 0 per cent on overnight deposits; but the rate it charges for overnight loaning is still at 1.5 per cent. And its headline rate, which it charges to the majority of the banking system, is still at 0.75 per cent, leaving ample room for a cut.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Be a glitch in our benefits system, and the punishment is to starve

Faceless bureaucrats are tipping claimants into hunger. 

So it’s official. If anyone still doubted that benefit sanctions are linked to food bank usage, a study by the University of Oxford and the Trussell Trust has found “a strong, dynamic relationship exists” between the number of sanctions in local authorities, and the number of adults receiving emergency food parcels.

The research examined the impact of tougher sanctions imposed by the Coalition government in 2012. For every extra 10 sanctions per 100,000 claimants, there were five more adults needing food. By contrast, when sanctions declined by 10, there were roughly 2 fewer instances of adults needing food. 

The study questioned whether a system that creates food poverty is “a fair penalty” for those who intentionally or inadvertently break the rules surrounding benefits payments.

Indeed, benefits sanctions can often, on appeal, seem brutal. Take the man who missed his Jobcentre appointment because he was in hospital after being hit by a car, or the woman who received her letter a day after the proposed meeting was scheduled. 

But what the study doesn’t chart is the number of people plunged into food poverty simply because of a bureaucratic mistake. A 2014 report by MPs, Feeding Britain, noted benefit-related “problems” was the single biggest reason given for food bank referrals. 

It found that many of these problems were avoidable: 

“We heard that one such problem arose as a result of Jobcentre Plus staff having to rely on two different computer systems, each on different screens, in order to calculate and process a claim, if more than one benefit was involved. This was likely to delay the processing of a benefit claim.”

In other words, the system we pay for with our taxes is failing us when we need it.

Claimants often find themselves at the bottom of an unaccountable power structure. Gill McCormack, who is the manager at the Glasgow North West food bank, has a son with Down’s Syndrome and brain damage, and lost her husband at just 21.

As an unusually young widow, she repeatedly has had to show benefits officials her husband’s death certificate, and fight for her son’s Disability Living Allowance. At one point, her benefits were stopped, and she lived on bags of frozen peas.

She told a fringe event at the SNP conference: “The amount of times I have been back and forth with this system – the only way I can describe it is as a ping pong table.”

If administration errors can leave people this hungry – and when I was a journalist at The Mirror I heard from readers about dozens of similar cases – we are heading for a world where large gaps in support are institutionalised.

Universal Credit, the new benefits system being rolled out across the country, only kicks in after six weeks. Claimants can apply for an advance. But if this is not properly communicated, six weeks is long enough to starve. 

As the study acknowledges, modern food poverty does not just exist in food banks, which are a very specific type of lifeline. The Facebook group Feed Yourself For £1 a Day has nearly 70,000 members. Some are simply frugal mums or house proud retirees. But many of those who post are desperate.

One reason is illness. A single mum, recently wrote that the group was a “lifeline” when she was coping with breast cancer: “I have never been so poor.” Another wrote back that after being diagnosed with breast cancer, she lost her home and her job, and was forced to spend 10 days living in her car.

Others are simply women going back to work, who lose their benefits and have to wait for wages. A mother in five wrote in asking for cheap meal ideas as “I’ve got £50 a week to live off as starting work”. 

So what is the answer to this kind of hidden hunger? The government is still consulting on a “Help to Save” scheme, that will provide more incentives for low-paid workers to create a rainy day fund. Groups such as Feed Yourself for £1 a Day should be encouraged, because they are valued by their members and teach families how to eat healthily for less. But shifting responsibility to those on the breadline only works so far. After all, you cannot easily save if you are an unpaid carer. You cannot cook from scratch if your gas meter has run out. And you can't keep to a budget if food prices, as predicted, start to rise.

The latest research into food banks should reignite the debate about sanctions. But it should also raise wider questions about those who administrate and enforce our taxpayer-funded welfare state, and how, in the 21st century, faceless officials can tip unfortunate people into something close to famine. 

Not recently, many commentators found it hard to believe the plotline of Ken Loach’s latest film, in which a man is denied disability benefits because of a computer glitch. Perhaps they're not to blame - after all, since Jobcentres are removing the free phones that would allow claimants to kick up a fuss, many are effectively silenced. But so long as the food banks stay open, there is more listening to be done. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.