Merkel backs Ital­ian PM over EU bud­get rules

The Myanmar Times - - International Business -

GER­MAN Chan­cel­lor An­gela Merkel has given strong back­ing to Ital­ian premier Mat­teo Renzi, sug­gest­ing she could be flex­i­ble over EU bud­get rules as Rome grap­ples to kick­start its stalling econ­omy.

She made the com­ments at a press con­fer­ence af­ter talks with Mr Renzi and French Pres­i­dent Fran­cois Hol­lande.

“Mat­teo Renzi has ini­ti­ated coura­geous re­forms in­clud­ing the jobs act here in Italy. It won’t show re­sults within four weeks but it sets the pa­ram­e­ters for a sus­tain­able and suc­cess­ful Italy,” she said.

“I am do­ing ev­ery­thing in my power to sup­port him with this.”

Rome is seek­ing a new deal with the Euro­pean Union to al­low it to boost its weak econ­omy with an ex­pan­sion­ary 2017 bud­get.

A min­is­ter sug­gested this could mean let­ting the 2017 bud­get deficit run higher than pre­vi­ously planned, pos­si­bly up to the 3 per­cent of GDP ceil­ing en­shrined in the euro­zone’s Sta­bil­ity Pact.

Asked about flex­i­bil­ity Mr Renzi is seek­ing to fi­nance in­vest­ment in 2017 to kick­start Italy’s timid eco­nomic growth, Ms Merkel sig­nalled her open­ness.

“I think the Sta­bil­ity Pact has quite a lot of flex­i­bil­ity that we can use in a clever way. That is the re­spon­si­bil­ity of the [Euro­pean] Com­mis­sion – it’s not one [EU] mem­ber state that de­cides vis-a-vis another.

“We are all in a dis­cus­sion with the Com­mis­sion. We want Italy, France and Ger­many to grow such that jobs with fu­ture can be cre­ated,” she added.

The com­ments come as Mr Renzi’s poll ratings are wan­ing ahead of a con­sti­tu­tional ref­er­en­dum due be­fore the end of the year which could trig­ger po­lit­i­cal in­sta­bil­ity.

Weighed down by slug­gish do­mes­tic de­mand and a bad debt-laden bank­ing sec­tor’s in­abil­ity to fi­nance in­vest­ment, the euro­zone’s third-big­gest econ­omy ground to a stand­still in the sec­ond quar­ter of 2016.

That was bad news for Mr Renzi, who has staked his po­lit­i­cal fu­ture on the ref­er­en­dum sched­uled for Novem­ber and has to pro­duce a 2017 bud­get by mid-Oc­to­ber. –

Photo: AFP

An­gela Merkel sup­ports the re­forms pro­posed by Italy.

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