Italy’s Renzi bids to change EU’s focus towards growth

The Italian Prime Minister insisted that Europe belonged to “citizens, not bankers” and said the only way for the EU to restore the flagging confidence of voters was to move away from the punishing austerity measures of the past and focus on economic growth.

Italy took over the rotating presidency of the European Union this week, and Prime Minister Matteo Renzi has vowed to use the six-month term to push for greater flexibility in the EU’s fiscal rules to ensure nations can focus on creating jobs as well as slashing budgets.

While the German Chancellor Angela Merkel – a fierce proponent of austerity – has indicated support for a more flexible approach, the Bundesbank chief Jens Weidmann provoked Mr Renzi’s ire with his comments earlier this week that Italy must first complete reform of its own economy.

“The Bundesbank’s task is the fulfilment of its statutory goals – it does not have among its tasks to take part in the Italian political debate,” Mr Renzi said. “I respect the Bundesbank and if they want to talk to us they are welcome, but we should all bear in mind that Europe belongs to European citizens, not bankers.”

EU leaders are still smarting after European Parliament elections at the end of May brought a surge in support for anti-establishment parties. Voters in many nations punished governments for the austerity policies designed to haul the eurozone out of crisis, but which have sent unemployment soaring and decimated social spending, while returning only sluggish economic growth.

Mr Renzi, who took office in February, was one of the few incumbents not to be humiliated at the polls by eurosceptics. He has seized the opportunity to push for a shift in the EU’s policy to focus on more spending to stimulate growth and create jobs, and introduce more time for nations like Italy to meet their budget targets. He has also promised to launch a reform programme for Italy, which is struggling to overhaul its labour market and reduce public debt, which is currently more than 130 per cent of GDP.

“We need a fresh start that should not only be based on economic values,” Mr Renzi said. “There is no growth without stability, but there is no stability without growth.”

Mr Renzi managed to secure backing for his vision at an EU heads of state summit at the end of June, which focused on nominating the next President of the European Commission. David Cameron had hoped Mr Renzi might prove an ally in his bid to block the nomination of Jean-Claude Juncker, but the Italian premier instead made his support of Mr Juncker conditional on some relaxation of existing budget rules.