Brussels - The European Union is working on an interpretation of its budget rules to accommodate Italy's demand to shift policy focus to growth, the outgoing leader of the European Parliament's Socialists and Democrats group, Hannes Swoboda said on Tuesday.
Italy's Prime Minister Matteo Renzi said in March that Italy, which takes over the rotating six-month presidency of the EU in July, would use its time at the helm of the 28-nation bloc to push for more budget flexibility for those reforming their economies.
“We are in contact with Renzi. We are trying to formulate a text for how the Stability Pact can be made more flexible without giving up the long term project of reducing debts,” Swoboda told a news conference.
“European Council President Herman Van Rompuy is working on a text,” Swoboda said. Van Rompuy is to meet Renzi in Rome on Wednesday.
Without stronger growth, Italy has little chance to reduce its huge public debt of more than 130 percent of GDP.
EU budget rules, called the Stability and Growth Pact, set a limit on budget gaps at 3 percent of gross domestic product and at 60 percent of GDP for public debt. They also contain complex rules on what countries have to if they breach these limits.
Swoboda said a more leeway was a condition for Renzi, a social democrat, to support the centre-right former Luxembourg Prime Minister Jean-Claude Juncker for the job of European Commission president.
The European Council is the assembly of all EU leaders, who are to nominate a candidate for European Commission president at their next summit on June 26-27.
Reuters