EU leaders pledge job funds, back new budget

European leaders on Friday agreed to deploy 8.0 billion euros ($10.4 billion) to help create jobs for young people at a summit that also backed a tentative deal on the EU'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 talks in Brussels which are to wrap up later on 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 states, warned that budget discipline remained key. "The main thing here is about improving our competitiveness," she said. "It's not about creating more and more pots of money." Leaders agreed that funds from the Youth Employment Initiative could be deployed from January 2014 to promote work placement programmes 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 soaring jobs crisis, with European Parliament chief Martin Schulz calling them "a drop in the ocean". One in four young people in Europe is 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 member states on the EU's multi-year budget, the subject of heated debate for months now. European Council president Herman van Rompuy said there was "full agreement" among leaders on the budget. But he added: "We discovered certain budgetary problems for certain countries and we will find an adequate solution."  These were "technical not political" questions, he said. Britain's Prime Minister David Cameron stepped into the summit pledging to do battle to protect the 3.1 billion sterling annual UK rebate won in 1984 by Margaret Thatcher. "It's absolutely essential that we stick to the deal that we reached in February and that we protect the UK rebate," he 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 premier's stand could derail a compromise reached on Thursday. "I think Prime Minister Cameron is never happy when we discuss the European budget," Schulz said. EU diplomats were more blunt, with one telling AFP 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. "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 fuelling animosity towards EU institutions. A Pew Research survey last month branded the European Union "The New Sick Man of Europe", showing favourable opinion of the EU had slumped from 60 percent last year to just 45 percent now. "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 its 28th EU member, the first new arrival to the club since Bulgaria and Romania in 2007. Serbia is expected to win endorsement at the EU summit on Friday to begin membership talks no later than January, having agreed to tough conditions to normalise ties with its former province Kosovo. Albania is also hoping its membership bid will win fresh support, after weekend elections were won by the opposition by a landslide in a vote closely watched by the European Union. Privately however, EU officials worry about bringing more troubled economies into the European system. Citizens from the core EU states are increasingly opposed to enlarging towards the poorer east.