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Thursday, June 27, 2013

Latest EU reaches political deal on seven-year budget

Latest EU reaches political deal on seven-year budget- A political deal on the EU's hotly contested seven-year budget has been struck, European Commission President Jose Manuel Barroso has announced.

The deal on the 2014-2020 960bn euro (£822bn; $1.3tn) budget was reached between member states and European Parliament leaders, 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.

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.

There are still fears that a bank run in one country could spread contagion across a still fragile eurozone.
Weak lending

"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.

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.
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.

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 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.
He paid tribute to both Mr Barroso and the Republic of Ireland, which currently chairs the EU.

A European Parliament vote on the budget could come as early as next week, a source at the parliament told the BBC News website.

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.


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