With 3.58 million under-25s in the euro area jobless in October, youth unemployment is a scar that shows little sign of healing

This article is more than 6 years old

This article is more than 6 years old

The crisis facing the younger generation across the Eurozone worsened last month as youth unemployment hit a new record high of 24.4% with under-25s in Spain, Italy and Portugal finding it harder to get jobs.

The grim news on on employment came as the Netherlands was stripped of its prized AAA credit rating despite the country's recent exit from a year-long recession.

Ratings agency Standard & Poor's said on Friday that weakening growth prospects showed the country would struggle to improve its financial stability and generate new jobs.

It said: "The downgrade reflects our opinion that the Netherlands' growth prospects are now weaker than we had previously anticipated, and the real GDP per capita trend growth rate is persistently lower than that of peers."

It cited weakening consumer demand, high levels of personal debt and falling house prices for keeping consumer spending and tax receipts low in the next few years. One in four Dutch homebuyers is in negative equity as a result of falling property values.

Jeroen Dijsselbloem, the Dutch finance minister, said S&P's downgrade to AA+ was disappointing when the economy had returned to growth.

S&P's action leaves only three members of the eurozone with a top rating from all three agencies – Germany, Luxembourg and Finland.

The Eurozone jobless data showed Spain's youth unemployment rate has now increased to 57.4%, only marginally below Greece's August high of 58% - which remains the highest rate of youth unemployment for any country in the eurozone's history. Italy's youth unemployment rate rose to 41.2%, from 40.5% the previous month. In Portugal, it rose to 36.5% from 36.2%.

The startling figures from southern Europe contrast with rates in the north where Germany has a 7.8% youth unemployment rate and the Netherlands an 11.6% rate.

Italy's credit rating is perilously close to entering junk status and Rome is lobbying hard in Brussels for more time to cut the country's annual deficit. The coalition government headed by Enrico Letta said on Friday it would call a fresh confidence vote in parliament, despite winning a vote earlier in the week, to confirm his government's majority after the withdrawal of Silvio Berlusconi's Forza Italia party from the ruling coalition.

Letta said the vote would be held after his centre-left Democratic party elects a new leader on 8 December, and would be based on a new agenda for 2014 which would be discussed with coalition partners.

"The confidence vote will allow us to pass from defence into attack," said Letta, whose government is backed by the Democratic party, a centrist group Civic Choice and a centre-right group that broke away from Forza Italia.

Considering the chaos in Italian politics and the credit rating downgrades affecting some of the EU's traditional paymasters, France and the Netherlands in particular, there are still many analysts who fear for the eurozone's growth prospects over the next decade.

Youth unemployment also remains a scar that shows little sign of healing. While the adult unemployment rate fell across the eurozone from 12.2 to 12.1%, 3.6m under-25s are now unemployed, an increase of 15,000 on the previous month.