(By Paul Virgo) (see related stories on govt's economic blueprint and political situation) Brussels, April 10 - The European Commission (EC) said that there were major imbalances in the recession-hit Italian economy that require urgent attention in a report on Wednesday. "Italy is experiencing macroeconomic imbalances, which require monitoring and decisive policy action," the EC said in a report on 13 European Union states whose economies are considered in need of "in-depth reviews". The European Union's executive suggested that if these issues were not tackled there was a risk the eurozone's debt crisis could flare up again. "In particular, macroeconomic developments in the areas of export performance and the underlying loss of competitiveness as well as high public indebtedness in an environment of subdued growth deserve continued attention in order to reduce the risk of adverse effects on the functioning of the Italian economy and of the Economic and Monetary Union". The warning came on the day that outgoing Premier Mario Monti's cabinet approved its economic blueprint for 2013, the DEF. According to this, Italy's deficit for 2013 should be 2.9% of gross domestic product (GDP), below the 3% threshold allowed by the European Union, which means Italy should emerge from the procedure it is under for excessive deficit. It also said that Italy's huge public debt is expected to climb to 130.4% of GDP this year. Monti said that those forecasts showed that austerity measures introduced by his emergency government of unelected technocrats since it came to power in November 2012 had restored health to the public finances. But those measures have also deepened Italy's longest recession in 20 years, taking unemployment up to record levels of close to three million. On Tuesday Istat released data that showed the recession, which is forecast to continue until the second half of this year, has had a massive impact on Italian's purchasing power, consumer spending and saving rates. There were more negative figures on Wednesday, when the national statistics agency said industrial production fell 3.8% in February compared to the same month in 2012, the 18th consecutive drop in the year-on-year seasonally adjusted data. It added that output in February was 0.8% lower than in January, effectively wiping out the 1% rise in the month-on-month data that was registered in January with respect to December. Istat said car production was hit particularly badly, falling 16.6% in comparison with February 2012. At about the same time Istat was releasing that data, Giorgio Squinzi, the president of Italy's powerful industrial employers' confederation Confindustria, urged the political parties to overcome their differences and form a government to tackle the country's economic ailments. "We've run out of time," Squinzi said regarding the political deadlock that has followed February's inconclusive general election. "We don't need a government at once, we need it even sooner than that". Squinzi said the stalemate over the last 45 days had cost Italy 1% of its annual gross domestic product. "That is 1.6 trillion euros," he said.