May 18, 2014 / 9:37 AM / 3 years ago

Italy economy minister pledges new measures to help companies

Italy's Finance Minister Pier Carlo Padoan smiles during a news conference at Chigi palace in Rome March 12, 2014. REUTERS/Remo Casilli

ROME (Reuters) - The Italian government will introduce a series of measures in the next few weeks to help boost corporate investment and lower costs for business, Economy Minister Pier Carlo Padoan said in an interview published on Sunday.

Italy is struggling to emerge from a two-year long recession with data last week showing the economy had contracted unexpectedly in the first quarter of the year.

Padoan told the daily Il Messaggero the government was preparing a “packet of financial provisions aimed at companies” that would complement the 80 euros a month tax break offered to low earners and longer term structural reforms.

“We will act on the investment side but also on reducing costs: the aim is to reinforce growth and increase the competitiveness of our companies,” he said.

The measures would be introduced “within a few weeks”, he said but gave no further details.

Padoan said the 0.1 percent contraction in Italy in the first quarter had not changed the forecasts underpinning the government’s budget planning. Italy was on one of several euro zone countries that experienced flat or negative growth in the quarter.

“No, a slowdown of 0.1 percent does not change the overall picture. Especially given that it’s a broad phenomenon with more or less all European countries, apart from Germany, showing weakness,” he said. “We simply have to accept that getting out of the great recession is very difficult.”

Last week Prime Minister Matteo Renzi ruled out any corrective budget measures to compensate for the slowdown, which could put at risk the government’s official forecast for 0.8 percent growth in 2014.

The risk of a return to recession is especially serious for Italy, the euro zone’s third largest economy, because of its 2 trillion euro ($2.74 trillion) public debt, one of the highest in the world and equivalent to some 133 percent of its total economic output.

While Italy’s budget deficit remains within the EU limits, both the European Commission and the European Central Bank warned in March that it had to do more to cut the debt.

Prime Minister Matteo Renzi, who cut taxes for lower earners from this month, has promised Italy will respect its commitment to EU budget rules. But he has also made it clear that with the economy still struggling to emerge from recession and unemployment near record highs, renewed doses of fiscal austerity are not the answer.

“All success stories feature growth, the more robust it is, the easier it is to solve problems. The case of Italian debt is no different,” Padoan said.

($1 = 0.7297 Euros)

Reporting By James Mackenzie; Editing by Elaine Hardcastle

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