BRUSSELS (Reuters) - Italy should press ahead with reforms to improve its economic growth potential, the head of the European Union’s executive arm said on Wednesday, after Italians voted to reject the austerity policies applied by outgoing Prime Minister Mario Monti.
“The crisis is not yet over and efforts must not be relaxed,” European Commission President Jose Manuel Barroso said in a joint statement with Monti after the two met for talks in Brussels.
Monti was widely credited with tightening public finances and restoring its international credibility after a debt crisis sent Italy’s borrowing costs rocketing and brought the euro zone to the brink of collapse in 2011.
But he struggled to pass the kind of structural reforms needed to improve competitiveness and lay the foundations for a return to economic growth.
The inconclusive election result this week gave no party a parliamentary majority and left comedian and anti-establishment figure Beppe Grillo, who has campaigned against Monti’s austerity reforms, holding the balance of power.
“President Barroso expressed his full confidence that Italy, as one of Europe’s and the world’s biggest economies, will ensure the conditions of political stability in the interest of Italy and Europe as a whole,” said the joint statement from Barroso and Monti.
It said Italy was undergoing an ambitious reform process that, if fully implemented, would significantly raise its growth potential.
The two agreed that “continued and determined action at European and national levels is needed to ensure that the return of confidence into the euro area is sustained”.
Barroso said the Commission was still committed to helping Italy and all other EU member states meet that challenge, which involved reform of public finances.
Reporting by Barbara Lewis and Francesco Guarascio; Editing by Tom Pfeiffer