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EU summit in Brussels wrestles with youth unemployment EU reaches political deal on seven-year budget
(35 minutes later)
The record unemployment blighting much of Europe will be the focus of attention at a two-day EU summit set to open in Brussels. A political deal on the EU's hotly contested seven-year budget has been struck, European Commission President Jose Manuel Barroso has announced. European Parliament speaker Martin Schulz (left) talks to European Commission President Jose Manuel Barroso in Brussels, 27 June
Across the EU, nearly a quarter of people aged 18 to 25 have no job. In Greece and Spain more than half of people in that age group are jobless. The deal on the 2014-2020 960bn euro (£822bn; $1.3tn) budget was reached between the Commission and leaders of the European Parliament, he said.
Leaders of the 27 countries are gathering for a summit in Brussels.
They are expected to focus on Europe's record unemployment, and youth unemployment especially.
Nearly a quarter of people aged 18 to 25 in the EU have no job, while in Greece and Spain it is more than half.
EU leaders will consider mobilising 6bn euros (£5bn; $8bn) earlier than planned to help youth training schemes.EU leaders will consider mobilising 6bn euros (£5bn; $8bn) earlier than planned to help youth training schemes.
A draft plan has also been agreed on how to rescue troubled banks Draft plans have also been agreed on agricultural reform and how to rescue troubled banks.
Bank creditors and shareholders would take the first hits, followed by savers with deposits of more than 100,000 euros. If that is not enough, government help would be called upon, and taxpayers would be among the last to shoulder losses.Bank creditors and shareholders would take the first hits, followed by savers with deposits of more than 100,000 euros. If that is not enough, government help would be called upon, and taxpayers would be among the last to shoulder losses.
There are still fears that a bank run in one country could spread contagion across a still fragile eurozone.There are still fears that a bank run in one country could spread contagion across a still fragile eurozone.
Weak lendingWeak lending
In a press release, European Council head Herman Van Rompuy said leaders should aim "above all to agree on tangible measures to bring down the high unemployment levels... especially for young people". "I am delighted to announce that today we have a political agreement on the European Union's future budget," Mr Barroso told reporters in Brussels.
EU youth employment schemes should be accelerated, he said, and youth mobility increased. The 2014-2020 budget, which has a ceiling of 960bn euros, was agreed at a summit in February but its ratification had been blocked by the parliament.
The speaker of the European Parliament, Martin Schulz, confirmed the deal in a tweet and urged MEPs to give it their backing.
He paid tribute to both Mr Barroso and the Republic of Ireland, which currently chairs the EU.
European Council head Herman Van Rompuy said leaders should aim "above all to agree on tangible measures to bring down the high unemployment levels... especially for young people".
EU youth employment schemes should be accelerated, he said, and youth mobility increased, he said in a press release.
A source at the European Commission said an extra 10bn euros in funding for the European Investment Bank (EIB) could be used to encourage private banks to lend more to small and medium-sized businesses (SMEs), especially in the struggling southern "periphery" economies hit hard by the euro crisis.A source at the European Commission said an extra 10bn euros in funding for the European Investment Bank (EIB) could be used to encourage private banks to lend more to small and medium-sized businesses (SMEs), especially in the struggling southern "periphery" economies hit hard by the euro crisis.
The idea is to turn that 10bn into EIB guarantees worth 100bn - enough to cover loans issued by private banks. The source stressed that "it is not new money" - it would come from the EU structural funds already earmarked for Europe's poorer regions.The idea is to turn that 10bn into EIB guarantees worth 100bn - enough to cover loans issued by private banks. The source stressed that "it is not new money" - it would come from the EU structural funds already earmarked for Europe's poorer regions.
The focus is on SMEs because they account for about 99% of businesses in the EU, employing about 70% of the workforce, the Commission said. Despite the SMEs' importance in EU labour markets, bank lending to them fell by 10% in the first quarter of this year.The focus is on SMEs because they account for about 99% of businesses in the EU, employing about 70% of the workforce, the Commission said. Despite the SMEs' importance in EU labour markets, bank lending to them fell by 10% in the first quarter of this year.
But the source told journalists at a pre-summit briefing that co-ordinating action on jobs "is not easy at European level - social policy is mainly a national competence".But the source told journalists at a pre-summit briefing that co-ordinating action on jobs "is not easy at European level - social policy is mainly a national competence".
The Commission's Youth Guarantee plan would offer young people across Europe a quality apprenticeship or job in the first four months after becoming unemployed or leaving formal education.The Commission's Youth Guarantee plan would offer young people across Europe a quality apprenticeship or job in the first four months after becoming unemployed or leaving formal education.
The EU Commissioner for Employment, Laszlo Andor, says the scheme could help to reduce the growing north-south competitiveness gap in the EU.The EU Commissioner for Employment, Laszlo Andor, says the scheme could help to reduce the growing north-south competitiveness gap in the EU.
But the heavy lifting of job creation still has to be done by national governments, by making labour markets more flexible, stimulating growth and easing the tax and administrative burdens on SMEs, the Commission admits.But the heavy lifting of job creation still has to be done by national governments, by making labour markets more flexible, stimulating growth and easing the tax and administrative burdens on SMEs, the Commission admits.
Political obstaclesPolitical obstacles
John Springford, an economic analyst at the Centre for European Reform, said the EU was facing "very large political roadblocks" hampering the necessary macro-economic changes.John Springford, an economic analyst at the Centre for European Reform, said the EU was facing "very large political roadblocks" hampering the necessary macro-economic changes.
"They are stumbling towards integration very slowly - when the financial markets relax the pressure, the progress stalls," the think-tank analyst told BBC News."They are stumbling towards integration very slowly - when the financial markets relax the pressure, the progress stalls," the think-tank analyst told BBC News.
Germany - one of Europe's few economic bright spots amid the gloom of the euro crisis - is especially loath to pool risk at European level ahead of its general election in September, Mr Springford said.Germany - one of Europe's few economic bright spots amid the gloom of the euro crisis - is especially loath to pool risk at European level ahead of its general election in September, Mr Springford said.
Germany is making any aid for struggling eurozone economies strictly conditional on them enacting structural reforms, such as making it easier for companies to hire and fire. But such reforms are generally slow to bear fruit.Germany is making any aid for struggling eurozone economies strictly conditional on them enacting structural reforms, such as making it easier for companies to hire and fire. But such reforms are generally slow to bear fruit.
The draft summit conclusions, seen by the BBC, say the leaders note "the importance of shifting taxation away from labour as a means of increasing employability and boosting job creation and competitiveness".The draft summit conclusions, seen by the BBC, say the leaders note "the importance of shifting taxation away from labour as a means of increasing employability and boosting job creation and competitiveness".
On Wednesday, negotiators agreed on an outline for reforming the Common Agricultural Policy to make farming more sustainable and help smaller producers.
Some countries would be allowed to link direct subsidies to output levels in certain regions, to help maintain output where farmers face natural or other constraints, such as the dairy farms of mountainous central France, Reuters news agency reports.
"Most farmers will now have to make extra efforts in order to receive the 'green' funding," EU Climate Action Commissioner Connie Hedegaard said.
Leaders are also expected to approve accession talks for Serbia, as well as formalising Croatia's entry into the EU next week.Leaders are also expected to approve accession talks for Serbia, as well as formalising Croatia's entry into the EU next week.
Serbian Prime Minister Ivica Dacic said on the eve of the summit that he hoped to see his country join within five years at most. Belgrade, he said, had made a "huge step forward" in talks with its breakaway region of Kosovo - an issue which hindered the country's EU bid in the past.Serbian Prime Minister Ivica Dacic said on the eve of the summit that he hoped to see his country join within five years at most. Belgrade, he said, had made a "huge step forward" in talks with its breakaway region of Kosovo - an issue which hindered the country's EU bid in the past.