MILAN, Sept 15 European Union officials warned
Italy on Sunday not to let politics ruin recovery prospects and
upset debt markets in a week that could signal the end of Erico
Letta's fragile five-month-old government.
Olli Rehn and Manuel Barroso threw their weight behind
Letta, who also appealed for stability this weekend before a
Senate vote on Wednesday on whether Silvio Berlusconi should be
expelled from parliament following a conviction for tax fraud.
"I believe it is of paramount importance to keep political
stability in the country to ensure a recovery, mainly because
the latest data show the economy remains relativity weak,
without clearly indicating a return to growth," Rehn, the EU's
top economic official, told Italian business daily Il Sole 24
Italian industrial output was much weaker than expected in
July, falling 1.1 percent and undermining expectations that the
country might emerge from its longest post-war recession in the
Political instability has thwarted attempts to make the
economy more competitive and whittle down Italy's government
debt burden, one of the world's biggest.
Berlusconi's centre-right allies have threatened to sink the
government if Wednesday's vote goes against him.
Letta's left-right coalition, which needs the backing of
Berlusconi's People of Freedom party to survive, has bickered
since it was formed in April but the infighting has intensified
since Berlusconi was sentenced last month.
Barroso, the president of the European Commission, said he
did not want to interfere with Italy's internal politics but it
was his duty to demand a greater sense of responsibility from
all political forces.
"Italy needs systemic stability. It's one of the big
countries of the euro zone: when signs of political instability
emerge there are repercussions on the markets," Barroso told
Rome-based daily il Messaggero. "In this moment being wise is
Letta himself made an impassioned appeal for political
stability on Saturday, warning that a political crisis would
push up borrowing costs and throw Italy into chaos.
In the latest auction, borrowing costs on three-year bonds
reached their highest level in almost a year.
Rehn said he was confident Italy would find a way to meet
its targeted budget deficit of 2.9 percent of output this year,
adding that it was up to the government to decide how to achieve
However, he said Italy had done less than was expected of it
in terms of economic reforms and this had weighed on growth and