London

Monti says Italy not a eurozone contagion risk

Outgoing premier and FM says EC report wrong

Monti says Italy not a eurozone contagion risk

(By Denis Greenan). London, April 11 - Outgoing Italian Premier Mario Monti on Thursday rebutted a European Commission (EC) report that said Italy had major economic imbalances that could affect the euro economy. "There is no contagion from Italy," said Monti. In its report issued Wednesday on 13 EU states whose economies were considered in need of "in-depth reviews", the EC said that Italy's economy required urgent attention. The comments made headlines across Italy Thursday. "Italy is experiencing macroeconomic imbalances, which require monitoring and decisive policy action," the EC said. "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". Monti made his comments on the sidelines of a G8 meeting of foreign ministers in London. He has served as interim foreign minister since the resignation last month of Giulio Terzi. In other remarks, answering journalists' questions, Monti said he hoped the Italian premier who is to attend the upcoming G8 meeting in London in mid-June will be a new one, "in the fullness of his powers". Markets and Italy's partners are worried about possible continued instability after the inconclusive general election in February. Florence Mayor and rising Democratic Party (PD) star Matteo Renzi is among those claiming the Italian political system is wasting time as the country continues to suffer 40 days after the February 24-25 poll. Renzi has reiterated that PD leader Pier Luigi Bersani should swallow his pride and form a government with arch-enemy Silvio Berlusconi, or else agree to a snap election. Renzi denied plans to break from the PD and form his own party, saying "there are enough parties already". But tensions within the PD were stoked when Renzi was denied a post as one of the grand electors to decide who Italy's next president will be. Renzi claimed meddling by Bersani, who denied it. A PD-led alliance got a majority in the House but not the Senate on February 25, with Berlusconi's People of Freedom (PdL) party running them a close second, both with almost 30% of the vote, and comedian Beppe Grillo's anti-establishment 5-Star movement coming in 5% behind to hold the balance of power in the hung parliament. While Grillo refuses to talk to the PD or PdL, damning them as equally culpable in an allegedly corrupt and dysfunctional system, Bersani has repeatedly rebuffed Berlusconi's overtures for a grand coalition between left and right. Bersani is expected to take a second shot at rallying support for a minority 'government of change' after 'wise men' named by outgoing President Giorgio Napolitano produce a possible consensus platform Friday. Bersani, backed by the party's establishment and apparatus, handily defeated Renzi in centre-left primaries on December 2 and before last week's call for speedier action had been a loyal team player despite his contention the PD must be renewed. For several years Renzi, a fast-talking media-savvy politician who has been likened to a young Tony Blair, has been calling for the party to "scrap" its old leadership. According to polls, a centre-left alliance led by Renzi would have secured a majority in the general election, despite a controversial system that militates against a clear winner emerging. The Florence mayor is also topping polls as the most popular choice for next premier. Renzi has also been consistently touted as a good choice to calm the financial markets and reassure Italy's partners.

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