Renzi says euro zone crisis goes wider than Italy

ROME Thu Aug 14, 2014 11:17am EDT

Italian Prime Minister Matteo Renzi talks during a joint news conference with European Commission President Jose Manuel Barroso at the end of a meeting at Villa Madama in Rome July 4, 2014. REUTERS/Remo Casilli

Italian Prime Minister Matteo Renzi talks during a joint news conference with European Commission President Jose Manuel Barroso at the end of a meeting at Villa Madama in Rome July 4, 2014.

Credit: Reuters/Remo Casilli

ROME (Reuters) - Prime Minister Matteo Renzi pointed on Thursday to weak economic data from Germany and France to reject suggestions that Italy, whose economy has fallen back into recession, posed a particular threat to euro zone stability.

Speaking during a visit to southern Italy, Renzi said data indicating that the German economy contracted by 0.2 percent in the second quarter while France stagnated showed that Italy was only part of a problem affecting the whole of the euro zone.

"The point is that there is no crisis in Italy to set against a euro zone going at twice the speed. That was the case in the past," he said during a televised news conference in the southern city of Reggio Calabria.

"The situation has changed. The problem is that the whole euro zone is going through a phase of stagnation."

Italy has consistently grown less than the euro zone average since the start of monetary union and is forecast to do so this year as well.

Renzi, who has led calls for a more expansive interpretation of European Union budget rules to put more emphasis on growth, has come under pressure to move more quickly on implementing promised economic reforms after weak data from Italy last week.

A preliminary estimate from official statistics office ISTAT showed that Italy had fallen back into recession after a brief period of remission at the end of last year, while consumer price data this week pointed to a growing risk of deflation.

The data revived worries about Italy's chronically weak growth record and the potential threat to broader euro zone stability posed by its 2.2 trillion euro public debt, the fourth-highest in the world.

However, Renzi, who met European Central Bank President Mario Draghi for more than two hours on Tuesday, said the whole of the euro zone was struggling.

"When we ask for more attention to be paid to the issue of growth in Europe, we're not asking for any favors for Italy. We're asking it because we think it is the only recipe for Europe," he said.

He said his government would detail proposals for reform of the creaking justice system and bureaucracy, often identified as obstacles to foreign investment, at the end of August after the government returns from its summer break.

(Reporting by James Mackenzie; Editing by Kevin Liffey)

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.