Italy's newly appointed Prime Minister Enirco Letta landed in Brussels yesterday evening (1 May) for a two-day visit to the EU capital, with the economic and political situation at the centre of discussion.

 

European Council President Herman Van Rompuy said on Wednesday that the European Union supported efforts by Letta to boost Italy's economy, but public finances must be kept in order.

Letta has preached an end to austerity while at the same time pledging to meet European Union debt targets.

"The prime minister informed me of the main elements of the programme of his government, in particular the measures he intends to introduce to re-launch economic growth to make Italy more competitive, and to tackle the difficult social and employment situation," Van Rompuy said in a statement after their meeting in Brussels.

"I reiterated that the EU will continue to stand by Italy in pursuing our common commitment to overcome the economic crisis and promoting growth and jobs, in making full use of the existing flexibility while keeping sound public finance as a key objective."

Berlin stands firm on deficit goal

In a visit to Berlin on Tuesday, Letta said his government would meet its budget commitments but expected Europe to drop its austerity mantra and do more to lift growth.

Speaking in Berlin on his first foreign visit since taking office, Letta warned that Italy's February election, which saw a surge of support for parties attacking the European Union, showed that a change of course was needed.

"The message which has arrived from the Italian electorate should not be underestimated," he said, standing next to German Chancellor Angela Merkel at a news conference.

Merkel, seen by many in southern countries like Italy, Spain and Greece as the champion of Europe's increasingly unpopular belt-tightening approach, struck a conciliatory tone, saying "budget consolidation and growth need not be contradictory".

"The goal is not deficit or growth numbers but getting people back to work," she said.

Letta, 46, whose coalition is built on an uneasy alliance of his centre-left Democratic Party and the centre-right People of Freedom party of Silvio Berlusconi, has joined a growing chorus in Europe calling for an end to austerity.

"We have done and will continue to do everything needed to keep our finances in order but we believe Europe must pursue policies for growth," he said, adding that productive investment should be promoted as strongly as fiscal consolidation.

Pressure to negotiate budget leeway

Letta, who won a final parliamentary confidence vote in his new coalition government earlier on Tuesday, has already come under pressure from coalition partners to negotiate budget leeway for Rome with its EU partners.

But he faces opposition in Germany, which has its own elections in September and where voters are strongly in favour of making heavily indebted states like Italy cut spending.

Even before the vote of confidence in the Senate on Tuesday, Berlusconi threatened to pull his People of Freedom out of the coalition if Letta does not abolish an unpopular housing tax.

Letta travelled to Paris on Wednesday where he met a more sympathetic hearing from French President François Hollande, who is also pushing for a switch of emphasis towards growth rather than austerity.

In Brussels, he planned to meet with European Commission President José Manuel Barroso on Thursday.