Soaring unemployment and biting austerity will top the agenda at a summit of EU leaders starting today, with the social consequences of the region’s debt crisis now seen as the greatest threat to the survival of the single currency.

The President of the European Parliament, the EU’s only directly elected body, warned this week that a generation risked losing faith in Europe unless rapid steps are taken to tackle joblessness and recession.

The two-day summit will also give EU leaders a chance to discuss budget policies, with signs that France and Spain could be given more time to meet deficit goals as long as the trend of careful fiscal management is maintained.

After three years of combating a crisis that has forced the rescue of Greece, Ireland and Portugal and left Spain on the rack, the meeting is likely to be less of a crisis gathering and more of an opportunity to assess the fallout from the turmoil.

The European Central Bank’s promise last year to do “whatever it takes” to protect the currency, including buying the debt of distressed countries if needed, has reassured financial markets and helped lower borrowing costs dramatically, bringing about relative calm over the past six months.

But the social impact of the crisis, including the fact that 27 million people, or 11 per cent of the EU population, is out of work, among them half those aged 15-24 in Spain and Greece, promises to have much deeper and longer-term repercussions.

That also forms part of the debate between austerity and growth, with growing disillusionment among centre-left governments about the harsh regime of budget cuts enforced by the EU, especially when no growth is emerging either.

Clemens Fuest, the head of Germany’s ZEW economic institute, warned last month that sustained recession and high unemployment in countries such as Greece and Spain could tear the fabric of Europe apart and lead to the collapse of the euro.

“That is really the current plausible scenario for a break up of the currency union,” he told Reuters. “It may very well be that in these countries at some point the population will say ‘we don’t believe that things will get better’.”

At that point, he said, the EU would be left with a choice between a large-scale programme of redistribution to the south of Europe, or the decision by a country to leave the euro.

“If things continue, if unemployment goes up to 30 per cent or something in Spain, there certainly is the danger that might happen,” he said. That view was seconded by Zsolt Darvas, an economist at Bruegel, a think-tank that frequently informs EU policy.

“There’s a very high probability that if the economic situation doesn’t improve in a very strong and visible way, governments will fail and the catastrophe will come, they will leave the euro,” he told Reuters. In a statement prepared ahead of the summit, EU leaders highlighted their concern about growth and unemployment and committed themselves to a “youth employment initiative” that sets aside nearly six billion euros for the worst-affected regions of the EU over the coming seven years.

“Addressing unemployment is the most important social challenge facing us,” the draft summit statement reads.