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Europe to support Renzi reforms says Barroso

Feelings shift after skepticism over Italy's deficit

20 March, 20:02
Europe to support Renzi reforms says Barroso (By Christopher Livesay) (ANSA) - Brussels, March 20 - Feelings shifted from chilly to warm on Thursday following Premier Matteo Renzi's meeting with European Commission President José Manuel Barroso, who said "Europe will support reforms in Italy" after first signaling skepticism. After exiting a bilateral with Italy's young new premier, Barroso tweeted about the "very positive" encounter ahead of a summit of EU leaders in Brussels Thursday and Friday. Aiming to jolt the sclerotic economy out of a slow recovery from Italy's worst recession since World War II, Renzi plans to cut income taxes by 10 billion euros, invest 1.74 billion euros in social housing programs, spend 3.5 billion euros on schools and repay 68 billion euros in outstanding bills, among other things. Earlier in the day, Barroso seemed to raise concerns regarding Italy respecting its budget commitments.

On Wednesday, Renzi said that Italy would respect the EU deficit-to-GDP limit of 3% even though he considered it out of date. Renzi has also said, however, that Italy's deficit for 2014 may be higher than the 2.6% it was forecast to come in at this year, while remaining within the 3% limit. "The Italian premier has committed himself to a very ambitious program of reforms while at the same time saying he would respect the commitments made at the European level," Barroso added. "I think this is fundamental for confidence in Italy and the whole EU".

Renzi soon responded by insisting that Italy was indeed "in compliance with all" EU budget commitments.

Later he said he was happy Europe appreciated the structural reforms his government is set to implement. "Barroso wrote a very clear tweet", Renzi said during a pause in an EU summit.

The encounter marked a second powerful vote of confidence in Renzi's governance this week. On Monday German Chancellor Angela Merkel, head of Europe's biggest economy, called his measures "ambitious" after a friendly bilateral with Renzi.

"Italy is not coming to Europe as a lagging student but as a founding member that respects (fiscal) limits," Renzi said at the EU summit Thursday.

Since forcing out his predecessor Enrico Letta last month, the center-left leader has been moving quickly to implement a series of reforms, ranging from the economy to the election system. Earlier this month his signature election reform passed in the Lower House, thanks to an alliance with center-right kingpin and three-time premier Silvio Berlusconi. The reform aims to avert the type of parliamentary deadlock witnessed this time last year following inconclusive elections, which ultimately led to the reluctant formation of the left-right coalition of his predecessor. A related bill that aims to reform the Senate, stripping its lawmaking powers and turning it into a leaner assembly of local-government representatives, should be ready next week, the government said Thursday.

The bill will also include changes to Article V of the Constitution to scrap Italy's provincial administrations and take back some powers from the country's regional governments, many of which are guilty of overspending. The aim of the reforms is to make it easier to pass legislation, and therefore govern Italy, and to reduce the huge cost of the country's political apparatus. A statement added that Renzi had asked the conference of Italy's regional governments to make a "contribution" in drafting the measures as they are "protagonists of the process of transformation of the Senate and reform of Article V".

Both reforms are seen abroad as crucial to increasing Italy's stability and credibility among international investors.

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