BRUSSELS (TIP): European leaders agreed on new steps to fight youth unemployment and promote lending to credit-starved small business on Thursday after deals on banking resolution and the long-term EU budget gave their summit a much needed lift. The 27 leaders resolved to spend 6 billion euros over the next two years to support job creation, training and apprenticeships for young people, and to raid unspent EU budget funds to keep the effort going thereafter.
Critics say the money is a drop in the ocean with more than 19 million people unemployed in the EU, and more than half of all young people under 25 without a job in Spain and Greece. Leaders also approved plans for the European Investment Bank to lend hundreds of billions of euros to small and medium-sized enterprises (SMEs) particularly in southern EU states where bank finance has largely dried up due to the euro zone’s debt crisis. “The last 24 hours have been a great success,” European Commission President Jose Manuel Barroso told a news conference. “Today we have agreed the money to back up our words.” After late-night talks in Luxembourg, European Union finance ministers agreed how to share the cost of future bank failures among investors and wealthy savers as far as possible. Separately, negotiators for the European Parliament, the European Commission and EU member governments clinched a deal on a 960 billion euro ($1.25 trillion) seven-year budget for the bloc for the period 2014-20, ending months of squabbling.
The leaders unanimously endorsed the agreement, EU Council President Herman Van Rompuy said, overcoming a last minute snag over Britain’s rebate, which will remain intact. The European Parliament must approve the deal next month so the new budget can take effect next January. The banking resolution agreement designed to shield European taxpayers from having to foot the bill for rescuing troubled banks will be implemented on a national basis from 2018. It lays the ground for a single system to resolve failed banks in the euro zone and the 27-nation EU, the second stage of what policymakers call a European banking union, meant to strengthen supervision and stability of the financial sector.
The European Commission, the EU’s executive, will put forward proposals for a single resolution mechanism next week, but any deal on it is a long way off because EU paymaster Germany opposes taking any liability for other countries’ banks. German Chancellor Angela Merkel welcomed the EU budget breakthrough, saying it would allow new spending on everything from agriculture to research, roads, bridges and development aid to move ahead, promoting economic growth in Europe.