* Renzi moves to speed up justice system, help investments
* Second quarter GDP contraction confirmed; jobless rate
* Consumer price inflation negative for first time since
(Recasts after cabinet meeting, adds Renzi comments)
By Isla Binnie and Gavin Jones
ROME, Aug 29 Prime Minister Matteo Renzi on
Friday presented a plan to quicken the pace of Italian justice
and break down bureaucratic obstacles to investment as fresh
data pointed to a further deterioration in Italy's recession
The 39-year-old prime minister, due to attend a European
Union summit in Brussels on Saturday, needs to restore
international confidence in Italy and show he can make good on
repeated pledges to revive growth and turn ambitious reform
promises into concrete results.
Italy posted its first annual fall in consumer prices in 55
years in August and statistics bureau ISTAT said on Friday
deflation would deepen in coming months. That followed a string
of grim data this week showing falls in retail sales and
consumer and business confidence and rising joblessness.
Speaking after a three-hour cabinet meeting, Renzi called
the measures approved a "revolution" and said they would bring
Italy's notoriously slow civil justice system more into line
with those of its European peers and halve the backlog of cases.
They include halving courts' summer holidays, facilitating
out of court settlements and reinforcing fast-track procedures
for company and family disputes.
Italy's cumbersome, expensive and unpredictable justice
system has long been singled out as one of the biggest hurdles
to attracting international investment, despite repeated
attempts at reform by previous governments.
The World Bank's 2014 Doing Business survey ranked Italy
103rd out of 189 on the ease of enforcing contracts, with a
company requiring an average of 1,185 days and 37 separate
procedures that eat up 23 percent of the value of a claim.
Among criminal justice proposals were tougher sanctions for
tax fraud and toughening the rules on the statute of limitations
with the aim of reducing the number of trials that are annulled
before reaching a verdict.
The cabinet also approved a so-called "Unblock Italy" decree
intended to accelerate infrastructure projects such as motorways
between the southern cities of Naples and Bari and the Sicilian
cities of Palermo and Catania.
Renzi's room for manoeuvre is limited by budget constraints
and Economy Minister Pier Carlo Padoan told reporters none of
the cabinet proposals, which now require the approval of
parliament, involved a cost to state coffers.
With his customary verve Renzi had played up Friday's
package during the summer political lull, saying it would be a
"big bang" and tweeting "I will amaze you."
However at the last minute he took ambitious plans for
education reform off the cabinet agenda and, with Italians
returning only slowly from summer holidays, there was an air of
anti-climax about his news conference.
Renzi said the education reform would be presented next week
and complained that reporters' questions showed little interest
in the measures that had just been approved, focusing instead on
European budget rules and the woes of the economy.
The cabinet also delayed plans to privatise or merge
hundreds of public utilities controlled by local authorities,
with Padoan saying this would be tackled in October when the
government presents its 2015 budget.
Renzi enjoys high poll ratings, but is facing growing
criticism in the media and among business and trade unions.
"The people who govern us need to make decisions, even
painful ones, that bring us to growth," Giorgio Squinzi, the
head of employers' confederation Confindustria, said at a
conference in the seaside town of Rimini.
Before the meeting Renzi posed in the courtyard of the prime
minister's palace with an ice-cream to indicate his displeasure
at a photo-montage on the cover of The Economist weekly, which
showed him holding a cone and resembling a schoolboy.
Renzi, who holds the six-month rotating presidency of the
EU, said the economic situation in Europe was "really worrying"
and that he would propose Oct. 6 as the date for a special
meeting of EU leaders to discuss the weakening growth outlook.
Italy has grown more slowly than any other country in the
euro zone over the past decade and most economists expect it to
again post little or no growth this year.
ISTAT confirmed on Friday the economy shrank 0.2 percent in
the second quarter, dragged down by a slump in investments. The
data showed that export growth, formerly the one sector to show
some resilience, had almost totally petered out this year.
It also showed that joblessness jumped to 12.6 percent,
close to record highs, and stands at 43 percent for those under
the age of 24.
"We're still losing 1,000 jobs a day," Luigi Angeletti, head
of the UIL union, said after data showed 69,000 people were
added to the jobless rolls in July from the previous month.
"The economy needs a government which does something,
instead of just pretending to do something," he said.
(Additional reporting by James Mackenzie and Paolo Biondi,
editing by Ralph Boulton and Howard Goller)