• Renzi - Stability without growth breaks the EU's economic pact (Photo: europarl.europa.eu)

EU 'selfie' would be 'tired and bored', Italian PM says

02.07.14 @ 19:31

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - Europe's selfie would be "tired, resigned, and bored," Italy's prime minister told MEPs as he formally opened his country's six month presidency of the EU.

Speaking in the European Parliament on Wednesday (2 July), Matteo Renzi's speech was laden with classical references and emphasised the need to rediscover "Europe's soul".

Renzi’s government took control of the bloc's rotating presidency this week and has indicated that the application of the bloc’s stability and growth pact and migration will be its main priorities.

The pact requires countries to keep their debt levels below 60 percent of GDP and budget deficits within 3 percent, the latter of which has been more strictly enforced.

At around 130 percent of economic output, Italy has the second highest government debt burden in the EU, but it has consistently run one of the lower budget deficits in the bloc and is currently within the EU's 3 percent limit. But with its economy still sluggish following a two year recession, it has been unable to stimulate growth to reduce its debt mountain.

The Italian prime minister has, with France's Francois Hollande, led calls in recent weeks for the pact’s rules on budget deficits to be interpreted in a way that encourages more public investment.

"We feel that you must not break the rules of the pact but those who talk about stability and not about growth break the principles of the pact," he told deputies, adding that "we have a very deep wound left because of short-term economic difficulties".

He added that Italy was ready to overhaul its economy and labour market and was not seeking "short cuts".

"Italy is coming here to say it wants to change," he said.

The prospect of loosening the terms of the pact is anathema to Berlin, where Angela Merkel's government has led the EU's austerity-heavy response to the eurozone crisis, although a reference to more flexibility in return for countries making structural reforms was included in the EU's five year strategy paper agreed by leaders at last week's EU summit.

German deputy Manfred Weber, who leads the centre-right EPP faction in Parliament, responded that it would be wrong to loosen the rules for Italy and France, insisting that "the right road is one of sustainable finances".

"What would we say to Spain, Ireland and Portugal?" he added, a reference to the tight terms attached to their bailout programmes.

Renzi also pledged to keep the UK onboard, commenting that "a Europe without the UK would be less European, less itself".

Since becoming prime minister in February, the 39 year old Renzi has enjoyed a honeymoon period at home and abroad.

His centre-left Democratic party scored a decisive victory in May’s European election, taking 31 of Italy’s 73 MEP seats on over 40 percent of the national vote.