Europe recession 'could be permanent', think tank warns

unemployment queue in Spain Image copyright Getty Images

The worst effects of the European recession risk becoming permanent in places, according to a left-leaning think tank.

The IPPR's latest report pointed to the high level of unemployment and underemployment across Europe and said the chances of these becoming entrenched is "deeply alarming".

It said there was 10% unemployment and a 5% underemployment rate in Europe.

The UK's main problem was low productivity, the IPPR said.

The official unemployment rate for the 28 countries in the EU was 9.3% in September, down from 9.4% the previous month. The rate in the 19 countries that use the euro stood at 10.8%, down from 10.9% in August.

The IPPR said that unemployed workers risked being left behind as globalisation and technological progress lead to changes in the skills that employers require.

German investment

The report suggested that European countries look to Germany as a good example of maintaining workplace skills and high productivity rates.

Germany - Europe's largest economy - invests 50% more on average than other countries in research and development.

The report also found that the UK's in-work training had fallen by 4 percentage points since 2008 - the largest decline for any EU country.

The IPPR said it welcomed the apprenticeship levy and the target for creating three million apprenticeships.

However, it called on the Chancellor, George Osborne, to hold off making any further cuts to the education and adult skills budget in Wednesday's Spending Review.

Image copyright Getty Images
Image caption Chancellor George Osborne meets apprentice Jordan Hankin during a visit to Winder Power in Pudsey earlier this year

Catherine Colebrook, IPPR chief economist, said: "For the UK, the task for policy makers will be to ensure that the UK continues to invest in developing the skills it needs to compete globally.

"It is striking that adult participation in education and training in the UK has fallen since 2008 by more than in any other country, at a time when participation has increased across most of Europe. Investment in the country's skills should be a priority for the Chancellor."

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