The two-day summit meeting signalled continuity in policies for fiscal consolidation, structural reforms, greater competitiveness and stronger growth.

After consultations, Chancellor Angela Merkel stressed that high budget deficits stand in the way of growth. When nation states borrow strongly, it becomes more expensive for private businesses to obtain finance. She also pointed out that there is no inherent contradiction between fiscal consolidation and growth policies.

Decision on European semester expected in June

The European Council looked at proposals made by the European Commission for the European semester and took stock. Decisions are not to be taken until the next European Council meeting in June.

The European semester is a six-monthly cycle that kicks in at the beginning of a calendar year within the framework of the Stability and Growth Pact. The European Commission issues an annual report on growth, in which it identifies the major challenges facing the European Union in terms of financial, economic and employment policy, and recommends measures to tackle these. On the basis of this report, the European Council draws up guidelines at its spring meeting to provide member states with an orientation for their budgetary policy.

The goal of the euro-zone group – improved competitiveness

For the first time the heads of state and government of the 17 euro-zone member states met separately. After the meeting Angela Merkel reported that the crucial task ahead is to make the euro-zone states more competitive. The low levels of productivity in recent years are the cause of high unemployment in the states currently in difficulties, she said.

"If we coordinate our economic polities better, we will be able to avoid this sort of imbalance in future and these divergent developments among euro-zone states," declared the Chancellor. "This was a very helpful constructive discussion which will, I am sure, help us move forward towards greater economic-policy coordination."

The heads of state and government also discussed the debt crisis in Cyprus. The ministers of finance will decide on the basis of the expected Troika report on a package to help the Cypriot economy. It remains to be seen whether a package can be put together. There can be no doubt that swift consultations are desirable, said Angela Merkel. "But they will continue until we have a sensible solution. What we need is a sustainable solution."

Fighting youth unemployment a particular priority

An important issue is the widespread youth unemployment in Europe and thus the allocation of the six billion euros earmarked for the programme adopted at the last European Council meeting. The necessary legal foundations must be put in place so that the funding can be used swiftly. The Conclusions of the Council meeting thus underscore the fact that addressing youth unemployment is the most important social challenge facing the EU at present and that it is a particular priority.

Also on the agenda – Syria and relations with Russia

At the Council meeting French President François Hollande proposed lifting the embargo on supplying weapons to oppositional forces in Syria. The United Kingdom too would like to see this. No decision was made by the European Council on this matter. The EU foreign ministers will be discussing the matter next week in Dublin.

Angela Merkel explained that there are good grounds for not supplying weapons to the opposition. Iran and Russia might then step up arms supplies to the Assad regime. The fragile situation in the Lebanon should also be taken into account. The Chancellor feels that the consensus building process is still ongoing.

In their foreign-policy consultations the European Council looked at relations with strategic partners, as they did in October. This second day of the meeting was dedicated to relations between the European Union and Russia. The Chancellor stressed that the EU is very much interested in good cooperation with Russia, but also mentioned difficulties, including human rights issues.