Merkel tells Italy: euro zone rules must frame economic discussions

BERLIN (Reuters) - German Chancellor Angela Merkel said on Monday she would work with any coalition government formed in Italy, but she also warned that any discussions on economic policy would have to be within the rules governing the euro zone.

German Chancellor Angela Merkel delivers a speech at the Global Solutions Summit 2018 in Berlin, Germany, May 28, 2018. REUTERS/Hannibal Hanschke

Anti-establishment forces abandoned their efforts to form a ruling coalition in Italy at the weekend after a standoff with President Sergio Mattarella, who vetoed their choice of a eurosceptic as economy minister.

On Monday, Mattarella set Italy on a path back to fresh elections, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget.

Commenting on the situation in Italy, the most heavily indebted country in the euro zone after Greece, Merkel said: “We should talk with every government but we have principles within the euro area and of course there will be difficult questions.”

Asked whether she was concerned by the situation in Italy, Merkel said during a conference in Berlin: “Look, when there were elections in Greece and Alexis Tsipras was made premier, there were many questions on the table.”

“We spoke with each other over many many nights, but together we achieved something. But we have to do that task, since Italy is an important member of the EU,” she added.

Germany’s DIHK Chambers of Industries and Commerce said on Monday that German businesses were relieved that eurosceptics were not taking power in Italy, the third biggest economy in the 19-member euro zone after Germany and France.

Volker Treier, foreign trade chief at the DIHK, said the populist parties’ decision meant their “prohibitively expensive Italian coalition agreement” was off the table for now.

“That is a relief for German businesses,” he said, adding that Italy would overtake Britain this year as Germany’s fifth biggest trading partner.

In Berlin, a government spokesman stressed Germany’s respect for Italian democracy and political institutions and said Berlin hoped for a stable government in Italy.

In Brussels, Germany’s Europe minister Michael Roth said Berlin hoped that Italy would form a stable and pro-European government soon.

Reporting by Thomas Escritt and Michael Nienaber; Editing by Gareth Jones