Andrew Ward | blogs.ft.com
Estonia has made some tough sacrifices for the dubious honour of joining the euro from January 1, 2011. Just how tough was illustrated by new unemployment data released on Friday.
So how long before Estonia, and its neighbours, start asking whether the whole project is really worth the hassle?
The jobless rate In Estonia leapt to an all-time high of 19.8 per cent in the first quarter, compared with 15.5 per cent in the previous three months.
The country’s economy has been in deep recession since the bursting of the Baltic credit bubble in 2008, contracting by more than 14 per cent last year alone.
The government could have softened the pain with stimulus spending. Instead, it kept a straightjacket on public finances as it battled to keep the deficit below the 3 per cent limit for euro entrants.
Tallinn got its reward on Wednesday when the European Commission gave it the green light to join. But there is more belt-tightening ahead for neighbouring Latvia and Lithuania as they aim for euro entry in 2014.
What about the neighbours?
Latvia’s unemployment rate was narrowly worse than Estonia’s in the first quarter at 20.4 per cent, according to figures released on Friday. That’s up slightly from the previous quarter and way up from 14 per cent a year ago.
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Euro self-sacrifice - but for Estonia and its neighbours, is the pain worth it?