FLORENCE, Italy May 9 Italy will propose
offering European Union member states that undertake structural
reform more flexibility on budget rules when Rome assumes the
presidency of the 28-member bloc later this year, Prime Minister
Matteo Renzi said on Friday.
Renzi has trod a careful line on budget policy since taking
office in February, insisting that Italy will meet all its
commitments on EU deficit rules while criticising the heavy
focus on fiscal policy that has characterised the bloc's
response to the crisis.
He has embarked on an ambitious programme of structural
reforms which he believes will do more to restore Italy's
battered economy, create jobs and ultimately ease the strain on
public finances than further budget tightening alone.
He said the October EU summit, expected to focus on the EU's
economic agenda could see concrete proposals for change.
"We respect the rules and it's precisely because we respect
them that we can say that a lot of these rules need to be
changed," he said at a conference organised by the European
University Institute in Florence.
"At the European Council meeting in October we'll try to
propose an initiative which goes in this direction: more
incentives for those which undertake decisive reforms," he said.
As EU president from July, Rome will be able to exert some
influence on the policy setting agenda but it will still need
agreement from its partners, many of whom are wary that
backsliding on its budget commitments could weaken efforts to
keep its 2 trillion euro public debt under control.
Economy Ministry Undersecretary Sandro Gozi said the
proposals would focus on easing the budget constraints in the
European treaties. "Anyone who does reforms should get more room
to use the flexibility that's in the treaties," he said.
Italy's budget deficit is expected to come in at 2.6 percent
of gross domestic product this year, well within the EU's 3
percent ceiling while GDP is expected to grow by a mere 0.6
percent, according to European Commission forecasts this week.
But after two years of deep recession, its public debt is
expected to reach 133.7 percent of GDP this year, second only to
Renzi said the European parliamentary elections on May 25
would be an opportunity to strike a middle course between "cold
technocratic language" and anti-European populism.
"Growth and jobs are the central values for Europe, not just
budget rigour and austerity," he said. "It's right to save the
states, it's good to save the banks, we need to save the Italian
and European middle classes and families."
(Reporting By James Mackenzie and Giselda Vagnoni)