|Anti-austerity protests have taken place across the eurozone [Reuters]
Europe's leaders will seek to chart the continent's way back to growth as figures show unemployment in the 17-country eurozone has spiked to its highest level since the euro was established in 1999.
While a two-day summit in Brussels opened amid relative calm on financial markets on Thursday, Europe's citizens are feeling the full impact of the massive budget cuts and economic uncertainty of the past three years.
New figures showed that unemployment in the 17-country eurozone hit 10.7 per cent in January, the highest level since the currency union launched in 1999. In early 2008, the figure was still dipping and closing in on just seven per cent. Youth unemployment stood at 21.6 per cent last month as Spain's rate hit 49.9 per cent.
Policymakers across Europe have made spurring growth and jobs their new mantra, but so far their proclamations have yielded few results.
Many economists want governments to stop slashing budgets as the continent heads into another recession, warning that more cuts will further destabilise the economy and make the debt situation even worse.
"This crisis and some remedies puts social cohesion at stake. It can also damage the European idea itself," said EU President Herman Van Rompuy.
"That is why we have to tackle inequalities and poverty."
Anti-austerity protests have moved out of the crisis hotspots like Greece or Spain and unions across Europe staged demonstrations across Europe the day before the summit.
Many feel that recent efforts by the EU and the European Central Bank have only benefited banks and investors, while ordinary people continue to suffer.
But political leaders say that large-scale spending won't kick-start growth.
"The general remark I hear is that 'if times are tough, you don't have to have austerity'. Well, I don't share that," said Dutch Prime Minister Mark Rutte.
"Your government finances have to be up to scratch because it gives confidence to markets, to investors, to your own citizens to spend wisely. So we want to have our budget in order," he added.
Even the French government, in the midst of a presidential election campaign, dismissed spending its way out of a crisis.
"We have to continue to consolidate our budget. We don't have another choice but to reduce our deficit," French Finance Minister Francois Baroin said.
The Netherlands, Germany and several others are betting instead on reforms to modernise Europe's economy by cutting red tape, making it easier to hire and fire people, and investing in better broadband networks.
Yet even the EU acknowledges that such economic reforms will take time to show results and has warned that governments often don't follow up on the commitments leaders make at their regular Brussels get-togethers.
Separate from the summit of EU leaders, the finance ministers of the eurozone are meeting to check on Greece's progress in implementing promised spending cuts and economic reforms.
Their discussions will likely take place in a more benign atmosphere after a panel convened by a securities dealers'
association ruled that the restructuring of Greece's government debt is not yet a credit event.
Greece has a wide array of policies and cuts to implement before it can receive a first batch of money from a $173bn bailout Athens needs to avoid bankruptcy.
Germany's finance minister, Wolfgang Schaeuble, said he was optimistic that Greece will get the green light for the money it needs to finalise a $142bn debt relief deal with banks and other private investors.
"From what I heard ahead of time, it looks as if Greece has made big progress," he said, referring to Athens' implementation of reforms and spending cuts. "Because of that I believe we will make a big step forward today."