EU leaders pledge $10 billion for job creation, back tentative budget


European leaders on Friday agreed to deploy €8 billion ($10.4 billion) to help create jobs for young people at a summit that also backed a tentative deal on the European Union’s next trillion-euro budget, despite simmering doubts.

The threat of a “lost generation” of young Europeans added urgency to the talks in Brussels, even though the pressure from the financial markets seen at the height of the eurozone debt crisis has eased in recent months.

“We have to give people jobs and we should not make false promises,” German Chancellor Angela Merkel said after the discussions, which were to wrap up later Friday. “It will take some time to create jobs for most young people.”

Merkel, who faces elections in September in a country largely weary of funding struggling southern European nations, warned that budget discipline remained key. “The main thing here is about improving our competitiveness. It’s not about creating more and more pots of money,” she said.

Leaders agreed that funds from the Youth Employment Initiative could be deployed from January 2014 to promote work placement programs and help job seekers find work in others parts of the European Union.

But critics said the measures were nowhere near enough to tackle the bloc’s soaring unemployment crisis, with European Parliament chief Martin Schulz calling the steps “a drop in the ocean.”

One in 4 young people in Europe are currently out of work — and that proportion is far higher in crisis-hit southern eurozone countries such as Greece, Spain, Portugal and Italy, where officials warn of a “social emergency.”

The funds had been in question, as they depended on a broader deal between the European Commission and the 27 EU member states on the bloc’s multiyear budget, the subject of heated debate for months.

European Council President Herman Van Rompuy said there was “full agreement” among leaders on the budget, adding that “we discovered certain budgetary problems for certain countries and we will find an adequate solution.”

These were “technical, not political” questions, he said.

British Prime Minister David Cameron stepped into the summit pledging to do battle to protect the £3.1 billion ($4.7 billion) annual U.K. rebate won in 1984 by the late Premier Margaret Thatcher. “It’s absolutely essential that we stick to the deal that we reached in February and that we protect the U.K. rebate,” Cameron said, referring to a February proposal on the budget.

French President Francois Hollande said there could be “some adjustments” to the way the rebate is calculated.

Diplomats said Cameron’s objection had delayed the opening of the talks and Schulz worried that the British prime minister’s stand could derail a compromise reached Thursday. “I think Prime Minister Cameron is never happy when we discuss the European budget,” Schulz said.

EU diplomats were more blunt, with one saying on condition of anonymity that it was “scandalous that a European summit is once again taken hostage by Cameron.”

“This was an undignified operation for a leader,” said another diplomat. “All this so he can go home crowing victory.”

The fallout from the economic crisis has stoked popular discontent that is feeding support for extremist political parties and fueling animosity towards EU institutions. A Pew Research survey last month branded the European Union “The New Sick Man of Europe,” showing favorable opinion of the bloc had slumped from 60 percent last year to just 45 percent.

“The European project now stands in disrepute across much of Europe,” it said.

But Eastern European states continue to bid to join the bloc of 500 million people. On Monday, Croatia will become the 28th EU member, the first new arrival to the club since Bulgaria and Romania in 2007.

Serbia was expected to win endorsement at the EU summit later Friday to begin membership talks no later than January, having agreed to tough conditions to normalize ties with Kosovo, its former province.

Albania is also hoping its membership bid will win fresh support after weekend elections were won by the opposition in a landslide, in a vote closely watched by the European Union.

Privately however, EU officials worry about bringing more troubled economies into the club, and citizens from core EU members are increasingly opposed to enlarging toward poorer nations in Eastern Europe.