However, there are significant differences between individual eurozone countries in terms of both unemployment and the pace at which this is falling.

Germany has seen a steady reduction in its unemployment rate, and now seems close to full employment with a rate of 3.9% of the working population. Spain s labour market is improving rapidly, although unemployment remains very high at 18.4%. The Italian and French labour markets did not see any real improvement, although the fall in the French unemployment rate seems to have been accel- erating since September (rate of 9.6%).

According to IMF estimates, the UK economy grew by 2% in 2016, down 0.2% on the previous year. The key event across the channel was the referendum on the United Kingdom s member- ship of the European Union on 23 June, which produced the famous Brexit. This vote heralded a period of political, institutional and economic uncertainty. The activation of article 50 of the Lisbon Treaty, which sets out the terms of a vol- untary, unilateral withdrawal from the Euro- pean Union, begins a two-year negotiating period to agree the conditions of departure.

The economic and financial consequences have so far been limited, barring the pound s dramatic response: a 10% drop against the euro since the outcome of the vote. This is good for British exports but will erode consumer purchasing power through higher import prices over the coming months. The UK economy is therefore likely to continue feeling the effects of Brexit in 2017, with growth of just 1.5% according to the IMF.

Unemployment rate in the main eurozone countries since January 1999

19 99

20 00

20 01

20 02

20 03

20 04

20 05

20 06

20 07

20 08

20 09

20 10

20 11

20 12

20 13

20 14

20 15

20 16

France Germany Italy Spain














Source: Bloomberg.

The eurozone managed to sustain growth of between 1.5% and 2% through consumer spending and an upturn in corporate investment.