Eurozone Unemployment Hits Record High Of 12%

Eurozone Unemployment Hits Record High Of 12%

Unemployment in the eurozone has hit a record high of 12%, as the number of people out of work in the 19 member states reached 19.07m.

Official figures published on Tuesday by the Eurostat statistics agency showed the number of unemployed people had risen by 33,000 between January and February.

Eurostat said the rate had "risen markedly" compared with February 2012, when it was 10.9%.

Among states within the eurozone, which does not include the UK, the highest increases in unemployment compared with a year ago were in Cyprus (10.2% to 14.0%), Portugal (14.8% to 17.5%) and Spain (23.9% to 26.3%).

Youth unemployment (under 25) also rose by 188 000 in the euro area. In February 2013, the youth unemployment rate in the eurozone was 23.9% compared with 22.3% in February 2012.

While Germany had a youth unemployment rate of 7.7%, Greece had a level of 58.4% (in December 2012), Spain (55.7%), Portugal (38.2%) and Italy (37.8%).

The figures came as it was announced around 15,000 savers in the UK arm of stricken Cypriot bank Laiki will see their deposits protected under British rules and will escape the Cyprus banking levy.

The Bank of England's new City watchdog, the Prudential Regulation Authority (PRA), said around £270 million in deposits from Laiki Bank UK had been transferred to Bank of Cyprus UK and would come under the UK compensation scheme, guaranteeing up to £85,000 per saver.

Customers, including those with current accounts in credit, will not be hit by any Cypriot levy on their accounts - potentially as high as 60% for large depositors - after the transfer and will be able to access their accounts as normal.

But customers with overdrafts will remain at Laiki, also known as Cyprus Popular Bank, and will see their accounts frozen.

The PRA, which officially came into effect yesterday under a regulation overhaul, has been working on plans for a resolution to protect UK branch customers of Laiki after Cypriot authorities announced it would shut and merge with Bank of Cyprus.

It is feared that depositors in Cyprus will be forced to accept losses of up to 60% under the European rescue package to save the country from bankruptcy.

Deposits of more than 100,000 euro (£85,000) at the Bank of Cyprus will lose 37.5% under a bank levy being imposed across the country, but a second raid on these accounts could see depositors lose up to 22.5% more to prop up the bank's reserves.

Chancellor George Osborne said last week in a hearing with MPs on the Treasury Select Committee he wanted a solution for customers of the UK arm of Laiki.

Laiki operated as a "branch" in the UK, which meant customers would have been subject to the levy, but today's transfer will see them become part of Bank of Cyprus UK - a UK subsidiary fully regulated under British rules.

The PRA said customers in overdraft will need to contact Laiki Bank UK, while those who had an overdraft but were in credit will need to contact Bank of Cyprus to apply for a new facility.

Mortgage borrowers and loan customers will instead be transferred to Bank of Cyprus in Cyprus and will be contacted in due course, but should continue making repayments as normal.

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