European leaders agreed on Friday (June 28) to set aside around 8 billion euros to combat youth unemployment, even as they admitted that the labour market would only sustainably improve once the crisis-hit region returns to growth.

Youth unemployment in Greece and Spain is hovering near 60 percent, while in Italy and Portugal it stands above 40 percent. Overall, close to six million people between the ages of 15 and 24 are without a job, sparking talk of a "lost generation" and fears of destabilising social unrest.

At the summit, leaders agreed to disburse about 8 billion euros - more than the 6 billion originally earmarked in February - to fight youth joblessness, with the bulk available over a two-year period starting in 2014 and the remainder becoming available over the full seven years of the next EU budget.

The funds will form the basis of a "Youth Guarantee" that aims to provide a job, training or apprenticeship to young people within four months of their leaving school, full-time education or becoming unemployed.

At the start of the talks, Prime Minister David Cameron had cast doubt over approval of a budget deal struck on Thursday by promising to fight off a last-minute attempt to shrink the country's annual rebate.

Cameron was referring a deal sealed by EU leaders earlier this year which left untouched the British rebate, worth some 3.5 billion euros a year and politically highly sensitive.

British officials confirmed that the issue had been resolved.

Britain's rebate was created to offset the relatively lower share of cash the country got from EU agricultural and infrastructure funds compared with other countries.

The row centred on a change to how rural development funds are paid to newer EU member states that joined the bloc after 2004 - and which are not included in Britain's rebate calculation - which threatened to shrink the payment by around 10 percent.

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