Austerity is out after the eurozone recession extended to a sixth quarter, but stimulus is not in.
That was the something-for-everyone message from European leaders at a summit in Brussels on Wednesday.
All touted a previously announced 6 billion euro (US$7.7 billion), seven-year initiative to fight youth unemployment, now at 24 percent.
National governments will not put up more cash, German Chancellor Angela Merkel said.
“It’s not a matter of money,” Merkel told reporters after the summit. “It’s a matter of looking at how to spend this money most productively.”
The eurozone’s nonstop contraction since the third quarter of 2011 has left the European Central Bank to try to mitigate the damage by cutting interest rates and exploring unconventional ways of channeling money to needy companies, especially in the south.
The euro economy will shrink 0.4 percent this year, the European Commission said this month, shaving a prior forecast for a 0.3 percent drop.
It was the commission’s fifth consecutive downgrade since November 2011, as unemployment soared in the south and the effects of the debt crisis crept north, to Germany and the Netherlands.
Several months of calm in financial markets allowed EU leaders to deal with energy policy and a clampdown on tax evasion on Wednesday. The next steps in handling the financial crisis were put off to next month when jobs, growth and the slowing push for a centrally regulated banking system will top the agenda.
The tax-and-spending mix will be in focus on Wednesday, when the Brussels-based commission recommends whether countries including France, Italy, Spain, Slovenia and even the traditionally low-deficit Netherlands deserve extra time to reduce their budget shortfalls.
Spain last year obtained a one-year extension.
Spanish Prime Minister Mariano Rajoy acted as if another concession is a done deal, counting on a “fair and balanced” decision to grant Spain until 2016 to bring the deficit below the EU limit of 3 percent of GDP. The shortfall was 10.6 percent last year.
“Austerity on top of austerity is dead,” said London-based Morgan Stanley analysts including Daniele Antonucci in a pre-summit report. “The pace of austerity has certainly eased, if not the path. One hindrance to envisaging some degree of economic stabilization has been removed.”
Increasingly, a jobs emergency has supplanted the fiscal one, with eurozone unemployment at 12.1 percent in March, the highest since the currency’s 1999 debut.
Jobless rates in the under-25 age bracket were 59.1 percent in Greece, 55.7 percent in Spain and 38.6 percent in Italy in January.
“We absolutely need to fight an Italian and European battle against unemployment, in particular against youth unemployment,” Italian Prime Minister Enrico Letta said.
Germany and France will put out a jobs plan on Tuesday, dubbed a “New Deal for Europe.”
Discussions are centering on using the European Investment Bank, the EU’s project-finance arm, to promote training programs and step up financing for small companies.