EU leaders win breakthrough EU budget deal

European Union leaders reached an outline deal Friday on the 27-country bloc's 960 billion euro ($1.3 trillion) seven-year budget, overcoming British objections to sign off on the agreement.

British Prime Minister David Cameron had held out for the same financial conditions already promised him months ago, overshadowing a summit called to approve plans to deal with the continent's youth unemployment problems.

However, in the end, all 27 nations backed the budget deal. EU President Herman Van Rompuy said `'it is a quite clear `yes',” when it came to unanimous backing of the 2014-2020 spending plan.

Beyond the seven-year spending plan, which still needs full parliamentary approval, the EU countries also injected a sense of fresh credibility into efforts to control the region's economic problems when they agreed earlier Thursday on the shape of future bank bailouts.

Nonetheless, the budget deal also highlighted deep divisions among the 27 EU nations over whether to spend or cut their way out of crisis, with the UK seeking reassurances that it won't have contribute too much at a time of belt-squeezing across the continent.

The multi-annual budget, which includes the first cut to EU spending in its history, determines what the bloc can spend on common infrastructure like railway or road projects, farming subsidies and aid to poor countries. It's separate from national budgets _ and much smaller _ but a source of difficult and passionate debate.

The decision only came after some protracted brinkmanship following the British objections to an outline reached early Thursday. Cameron surprised most with his call for “absolutely essential” guarantees that the EU stick to parts of an earlier agreement reached in February.

Due to a provision on agricultural funding, the country could have lost some of its previously negotiated repayment from the budget, costing it about an annual 200 million to 300 million euros, a diplomat from a major EU country said.

The issue left London up against Paris, which would have to pay for the bulk of the shortfall otherwise, the diplomat said. He spoke on condition of anonymity because he wasn't allowed to discuss the closed-door talks publicly.

In the end, Van Rompuy said the British concerns were taken on board since `'actually nothing has changed” since the February agreement.

The summit was initially meant to focus on finding ways to get more young people employed, and calmly taking stock of EU efforts to stabilize the world's biggest economic bloc now that its deep debt troubles have subsided.

Crucially, the EU budget also includes money for the employment measures that the bloc's leaders addressed at the two-day summit which finishes Friday. No budget agreement would mean no money for those projects.

Unemployment is at a record high of 11 percent for the EU and 12.2 percent for the 17 member countries that use the euro. It is far worse for the young: Latest figures show almost one in four people aged under 25 in the EU are unemployed. In Greece and Spain, that rate has it hit more than 50 percent.

French President Francois Hollande told reporters after the summit finished for the first day that 6 billion euros for youth jobs will be speeded up and spent over 2014-2015 instead of over 7 years.

In addition he said that there will be two to three times that amount in “European credits” for employment schemes.

Thursday's deal on the budget came only hours after EU finance ministers reached a landmark deal determining that banks' shareholders, creditors and holders of large deposits will have to bear the brunt of future bank failures, so that taxpayers don't have to.

The joint rules on how to restructure or wind down banks are a key step toward establishing a so-called banking union for Europe, aimed at restoring stability after a tumultuous few years that have dragged down the global economy. (AP)