Merkel backs Italian PM over EU budget rules
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. –
Angela Merkel supports the reforms proposed by Italy.