Brussels, 26/06/2013 (Agence Europe) - EU27 heads of state will adopt “a comprehensive approach” to fighting youth unemployment, adopting a new investment plan to boost financing for small businesses, at the European summit on Thursday 27 and Friday 28 June. It is possible that the tough inter-institutional talks on the European Union's multi-annual financial framework (MFF) for 2014-2020 will also be discussed (see related article).
There won't be any new measures as such, rather the promise of “speeding up and frontloading of the Youth Employment Initiative; speeding up implementation of the Youth Guarantee; increased youth mobility,” three measures already in the pipeline for 2014-2020, explains the summit's draft conclusions document, which this newsletter has seen. These measures were mooted by a number of countries, including France and Germany (see EUROPE 10857), and the idea of front-loading now seems to be accepted across the board as the methods identified by the European Commission for kick-starting the measures have been included in the draft conclusions document.
Half of the €6 billion earmarked for the Youth Employment Initiative would come from the European social fund (ESF) and half from a special fund. The entire €6 billion could be used in 2014 and 2015. The initiative is for regions of the European Union where youth unemployment is above 25%. The flagship measure is the Youth Guarantee, which sets up a system to offer every adult under the age of 25, within four months of arrival on the job market, with a high-quality job offer, training, apprenticeship or a traineeship.
Other measures will be added. The summit's draft conclusions document says a “particular focus” should go on ESF action and “to promote the mobility of young job-seekers” though programmes like Your First EURES Job and Erasmus +.
As a sign of the political significance of this subject, employers and trade unions will be invited to present their joint approach to the EU27 (see EUROPE 10864).
Financing small business. A European source said on Wednesday 26 June that there was a strong credit crunch in a number of member states for small businesses, hence the importance for the member states of taking action to tackle the fragmentation of the financial sector, which is causing vastly different interest rates for company borrowing from one country to the next.
The European summit will agree on an investment plan for Europe involving the European Investment Bank, based in part on the upcoming multi-annual financial framework (see EUROPE 10874). The summit will call for extra effort in implementation of the youth pact demanded in France and launched in June 2012 to counterbalance the budget pact. Asked about the practical impact of the growth pact amidst the worsening economic situation and unemployment figures, the European source said there was a mismatch between mobilisation of resources and results on the ground.
In his invitation letter to European leaders, the president of the European Council, Herman Van Rompuy, said that that better financial stability meant that all the measures can be adopted. He said that restoring healthy public finance, improving competitiveness and pursuing structural reforms remain a high priority.
In terms of the budget, the European summit will reiterate its call for budget consolidation that takes account of the situation in each country and that does not hinder investment for growth. It will endorse the country-specific recommendations recently adopted by the Ecofin Council (see EUROPE 10872) that allow more time for France, Spain and Slovenia to meet their budget targets, as long as they use this breathing space to introduce structural reforms. Hungary is opposing some of the measures recommended to it (like independence of the justice system).
EMU. Last December, the EU27 agreed to meet this June to discuss boosting economic and monetary union (EMU), but the meeting will not take place. The draft conclusions document says this is due to the extra work needed in the next few months, despite the degree of convergence noted. The question of contracts that member states could sign with Europe, committing to reforms to the economy in return for potential financial aid (but not from the EU budget as such) is still under debate.
Some countries, the Netherlands for example, oppose the idea of contracts, but others say that social criteria must be added (poverty levels and income distribution) when assessing economic policies. Other countries argue that boosting EMU, particularly the ambitious arm of it that would set up new solidarity instruments (such as partial pooling of sovereign debt emission), require changes to the EU treaties, and a decision on this cannot be taken until after the European elections in May 2014. Decision-making is also being held back by the upcoming general elections in Germany (in September 2013).
Banking union. On implementation of banking union, the summit conclusions document says it is vital to break the vicious circle between banks and sovereign debt. This will require the introduction of a single bank supervision system and adoption before the spring of 2014 of draft legislation for a single bank resolution mechanism (see related article). The European summit will call on the countries participating in the supervision mechanism to plan financial arrangements for when the results of the next batch of bank stress tests are published.
Latvia. The summit will give official approval to Latvia's joining the eurozone.
Enlargement. The European summit will endorse the opening of negotiations for Serbia to join the European Union and for an association agreement between the EU and Kosovo (see EUROPE 10874). (MB/JK/transl.fl)