Unemployment in the eurozone rose to a record high of 11.6 per cent in September, Eurostat, the EU's statistics office, reported today.

Recession and unemployment make it more difficult for the eurozone to deal with its debt problem — governments need to pay more benefits to the jobless and receive fewer tax revenues.

That could push countries to take even more austerity measures, which in turn weighs on economic activity.

The growing austerity burden led Greece's two main labour unions covering civil servants and the private sector to call today for a 48-hour strike beginning Nov. 6 to protest against spending cuts due to be voted on next week.

Previous protests accompanying such strikes have turned violent.

Eurozone jobless now 18.49M

The total number of people looking for work but without jobs in the 17 countries of the currency union was 18.49 million, higher by 146,000 from the month earlier.

The September rate rose slightly from the upwardly revised 11.5 per cent in August.

Both Greece and Spain, which are at the heart of Europe's three-year debt crisis, have youth unemployment above 50 per cent. That risks creating a lost generation of workers and is straining the countries' social fabric.

Extremist political groups in Greece and regional separatist parties in Spain have grown in popularity as the economy worsened.

Five countries in the eurozone are already in recession — Greece, Spain, Italy, Portugal and Cyprus — and others are expected to join them soon.

The region as a whole is expected to be confirmed to be in recession when the first estimate of eurozone economic activity in the third quarter is published mid-November — a recession is officially confirmed after two consecutive quarters of negative growth.

"With surveys suggesting that firms are becoming more reluctant to hire, the eurozone unemployment rate looks set to rise further, placing more pressure on struggling households," said Ben May, European economist at Capital Economics.

Greece forecasts bigger debt

The strike call in Greece came as the country’s finance minister submitted an amended 2013 budget that raised the country's debt and deficit forecasts for next year.

Greece's general government debt is projected to rise to 189.1 per cent of gross domestic product in 2013, above the 182.5 per cent predicted in the preliminary draft submitted at the start of the month. That's up from 175.6 per cent forecast for this year.

The revised figures projected the government deficit at 5.2 per cent of GDP, up from 4.2 per cent predicted in the preliminary draft of the budget — but still an improvement from the 6.6 per cent predicted for this year.

The government also predicted the country’s economy will shrink by 4.5 per cent, deeper than the 3.8 per cent contraction predicted earlier.

At the same time, Greek lawmakers approved a privatization bill in a fractious vote that saw dissent from members of the two junior partners in the three-party governing coalition. Passage was a condition for Greece to receive billions of euros in rescue loans from other eurozone countries and the International Monetary Fund.

Prime Minister Antonis Samaras has warned that without the aid, the country will run out of its euro reserves on Nov. 16.

Separately, Eurostat reported that inflation in the eurozone fell modestly to 2.5 per cent in the year to October, from the previous month's 2.6 per cent. Inflation is still above the European Central Bank's target of keeping price rises just below two per cent.

"High and rising unemployment, and relatively sticky inflation, does not bode well for consumer spending across the eurozone, especially as consumers in many countries are also facing muted wage growth and tighter fiscal policy," said Howard Archer, chief European economist at IHS Global Insight.

Business loan demand falls

Also Tuesday, the European Central Bank reported a "pronounced net decline" in business demand for credit in the third quarter. Its quarterly bank lending survey shows that companies are not asking for money.

Credit shows signs of shrinking even though banks are themselves finding it easier to raise money as the turmoil from the debt crisis has eased.

The key figure showed a minus 28 per cent balance, reflecting the difference between banks reporting more and less loan demand. The figure worsened from 25 per cent in the second quarter.

With files from The Associated Press