Anna Hartz
For years the southern economies of Europe were mocked during the debt crisis.
Economic reputations can change over time. Countries that once looked weak can recover. Others that once looked strong can lose momentum. Europe has seen this kind of shift more than once over the past two decades.
PIGS
Italy, Spain, Portugal, and Greece were grouped under the label “PIGS.” The term came from the British financial press and was used to describe countries seen as unstable and heavily indebted. Today the situation looks different. One striking example is the labor market. Italy now has a slightly lower unemployment rate than the United Kingdom, according to El Economista.
Recent data from Italy’s statistics institute shows that unemployment fell to 5.1 percent in January. This is the lowest level the country has recorded since 2004. In comparison, unemployment in the United Kingdom reached 5.2 percent at the end of 2025. It is the highest level Britain has seen in a decade.
The gap is small. It is only one tenth of a percentage point. Even so, it marks a symbolic change in the economic story of Europe.
The contrast becomes even sharper when looking at recent British figures. Youth unemployment has risen sharply. The rate for people aged 16 to 24 reached 16.1 percent in the last quarter of 2025. It is the highest level since 2014. It is also higher than the average in both the European Union and the eurozone. Nearly one million young people in Britain are now classified as not in education, employment, or training.
Weak labor market
Several factors explain Britain’s weaker labor market. Brexit disrupted trade and investment. Political instability also played a role. The country experienced several leadership changes and a brief financial crisis during the government of Liz Truss. The pandemic and the energy crisis after Russia’s invasion of Ukraine added further pressure.
Recent policy decisions may have added new strain. The government increased payroll taxes for employers and raised the minimum wage. Some economists say these moves made hiring more expensive. They argue that the changes have affected job growth, especially for young workers.
Italy’s progress comes from different forces. Economic growth after the pandemic helped create jobs. Employment has also risen steadily. The share of people in work has climbed from below 60 percent before the pandemic to more than 62 percent today.
Still, Italy faces its own problems. The population is aging quickly. Female participation in the workforce remains low. These factors limit the size of the labor market. Even so, the shift in unemployment rates shows how Europe’s economic balance can change over time.
