EU leaders agree on $150b growth package at summit

European leaders agreed on a growth package of 120 billion euro ($150 billion) to stimulate the economy at their two-day summit, but it seems that the money will not trickle down to businesses as urgently as expected.

As the summit concluded on Friday, the leaders also achieved consensus on the "building blocks" that can boost further integration of economic and monetary union.

German Chancellor Angela Merkel talks to European Central Bank President Mario Draghi, left, and Italian Prime Minister Mario Monti before the final day of the European Union leaders' summit in Brussels on Friday. [Photo/Agencies]

"What we have already agreed today concerns first of all the growth and jobs agenda," said Herman van Rompuy, president of the European Council, at the news conference on Friday.

He said the funds will be mobilized for immediate growth measures.

Van Rompuy said the funds consist of the increased lending capacity of the European Investment Bank and the reallocation of unused European structural funds, in particular, for small and medium-sized enterprises and youth employment.

However, for businesses that urgently need capital injection, the European Union's measures to tackle growth have not come quickly. The package is being floated about two years after the occurrence of the contagious debt crisis that caused recession in Europe.

The leaders started to shift their focus from austerity to growth at the beginning of this year. Despite that, businesses signaled their welcome to the measures.

"The European Union's decisions to channel 55 billion euros to small and medium-sized enterprises seem to be in the right direction," said Christos Vlachos, director of the Greece-China Business Council. "But a question mark should be put on the distribution of the capital."

He said the top-down process of reallocation would see some difficulties because of the bureaucratic system in Greece. Vlachos expects a new mechanism at European level to be put into place for reallocating capital.

Stamatina Markou, head of the Information Department of the Hellenic Chinese Chamber, said: "These measures are of great value for the survival of SMEs, which were the first victims of the crisis because of their vulnerability."

She continued: "European leadership has thus made a good move."

Van Rompuy also said that the leaders discussed the four building blocks toward a genuine economic and monetary union and they basically agreed to further prepare a report on the fiscal and economic policies needed to reach that goal.

"They must be accompanied by increased democratic legitimacy and accountability."

By working with other European institutions and member countries, Van Rompuy said the European Council will prepare a detailed report before the October summit.

Before the conclusion of the summit, the European Central Bank agreed to work as agent for the European Stability Mechanism and the European Financial Stability Fund in conducting market operations.

Eurozone leaders decided to establish a single banking supervisory mechanism run by the European Central Bank. Once this mechanism has been created, it will provide the European Stability Mechanism with the means to inject funds into banks directly.

"We affirm that it is imperative to break the vicious circle between banks and sovereigns," said the leaders in a statement.

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Tan Xuan contributed to this story.