José Manuel Barroso, the president of the European Commission, urged the European Council to use unspent money in the EU’s structural funds to create jobs and reduce youth unemployment.

He asked national leaders to consider re-directing an unused €82 billion within the structural funds budget.

Of that total, €60bn would come from the European Regional Development Fund (ERDF) and €22bn from the European Social Fund (ESF). Commission officials said that member states would have until the end of 2013 to draft, approve and implement new programmes to use the funds.

National governments would only be able to re-assign funds within their own national allocation under the 2007-13 financial framework. There is no suggestion that funds not spent in one member state could be transferred to another.

Spain has the most structural funds available for use, made up of €10.7bn from the ESF and ERDF, while Italy has €8bn and the Czech Republic €7bn.

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Angela Merkel, Germany’s chancellor, said that she welcomed the proposal. “In the past, we would have been very happy for undisbursed money to be returned [to the member states],” she said.

But she said that countries that were in trouble should now use the money “in a very targeted way” and that the best thing to do would be to lend it to small and medium-sized enterprises (SMEs).

Barroso followed up his initiative at the summit by sending a letter on Tuesday (31 January) to the eight member states with youth unemployment rates above 30%, urging them to set up teams of experts to identify measures to tackle the problems and use the unspent structural funds.

He asked the eight – Greece, Ireland, Italy, Latvia, Lithuania, Portugal, Slovakia and Spain – to develop action plans by mid-April. Those plans should then be incorporated into national reform programmes and should include measures to tackle youth employment and support SMEs.

Austrian MEP Hannes Swoboda, leader of the Socialists and Democrats group in the European Parliament, said that, while he welcomed the European Council’s focus on growth and unemployment, “the fight against youth unemployment remains weak and concrete measures to create jobs have not been taken up”.