4 Min Read
LONDON (Reuters) - Italy and Britain called on the European Union on Wednesday to promote steps to boost economic growth and not focus solely on austerity to bring down the debt levels that have thrown the single currency into crisis.
On his first visit to Britain since taking office in November at the head of a technocratic government, Italian Prime Minister Mario Monti held talks with British counterpart David Cameron, who has found himself isolated within the EU after refusing to sign up to a new treaty to tackle the euro zone crisis.
"We both believe - the UK and Italy - that adherence to fiscal discipline is a necessary condition for growth. It is not however a sufficient condition," Monti said during a speech at the London Stock Exchange.
"And we both believe that not only our individual countries but the European Union as a whole has a big role to play in order to foster economic union in a sustainable way," he added.
Monti was speaking after a closed-door meeting with financiers and investors aimed at assessing international appetite for Italian debt.
He voiced confidence that Rome's measures together with the steps taken by the euro zone as a whole would eventually get Italy off the danger list.
Speaking after meeting Monti, Cameron said he hoped the next EU summit at the end of the month would do more to ensure the proper working of the single market.
"We can start on January 30 with a really convincing set of steps on digital markets, on services markets, on energy markets, on growth tests, which will help open up all European economies and help those deficit countries deal with their deficits and help those surplus countries also make sure they are growing and expanding at the same time," Cameron said.
Monti, a former European Commissioner, was tasked with trying to restore market credibility after the collapse of Silvio Berlusconi's administration.
Monti has imposed tough austerity measures and is also seeking to introduce structural reforms to try to free up the Italian economy and loosen the grip of vested interests like taxi drivers and pharmacists.
However, Italy still faces 10-year borrowing costs of around 6.5 percent, widely viewed as unsustainable for an economy with a debt mountain of around 120 percent of GDP.
Monti gave short shrift to a reporter who asked why British taxpayers should provide up to 15 billion pounds in additional funding to help the International Monetary Fund clean up the mess left by Berlusconi and bail out other ailing economies.
"To my knowledge, my country has not cost a penny to the UK so far as I know. Nor vice versa. At least in the present historical phase," he said.
Credit rating agency Standard & Poor's last week downgraded Italy by two notches, while Fitch warned on Wednesday that it could follow suit. Italy's economy is expected to fall into recession this year.
Monti has called for the euro zone's European Financial Stability Facility rescue fund to be strengthened to help shelter Italy from market attacks.
Reporting by Keith Weir