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News Analysis: Italy's EU presidency pushes flexibility in economy

Xinhua, January 14, 2015 Adjust font size:

Faith in investment and growth pushed by flexibility was the acknowledged legacy of the Italian six-month duty presidency of the European Union (EU), which formally ended on Tuesday.

In his address to the European Parliament in Strasbourg to make the close of Italy's six-month term, Italian Prime Minister Matteo Renzi highlighted the progress made in getting more flexibility in the application of EU budget rules.

For many times in recent months, the Italian government has called on the EU to adopt a more flexible approach as the only possible way to restart growth in a context of economic recession and social tension.

In fact European Commission (EC) President Jean-Claude Juncker on Tuesday hailed Italy's guidance, which he said was key for the approval of his at least 315-billion-euro (371-billion-U.S. dollar) investment plan to boost jobs and growth in the real economy over three years.

"Without Italy's work there would have not been an (budget) agreement (for 2014 and 2015) and we would be in the midst of a budget crisis," Juncker said.

Also on Tuesday, the EC published a communication making clear that contributions of EU member States to the European Fund for Strategic Investments (EFSI), the main channel to mobilize the 315-billion-euro investment, shall not be counted when assessing the fiscal adjustments.

Francesco Daveri, a macroeconomics and economic policy professor at Bocconi University in Milan and University of Parma, said the Italian presidency has encouraged this change of direction in the EU economic policy towards less austerity and more spending.

"Compared to the past years, a monitoring on EU member States based on what they have done in terms of reforms as a bargaining chip in exchange for their missed fiscal targets has been brought into discussion," he explained to Xinhua.

The new approach, which according to Daveri will also mark the activity of next presidencies, has allowed the EU to "start evaluating member state budgets not only based on numbers but looking at the entirety of their economic policy, including structural reform and debt reduction plans."

Concrete results need time and effort, but the faith in investment and growth promoted by the Italian presidency have highlighted the will "to find alternative drivers of developments and ward off the risk of new economic crises which might be catastrophic," Massimo Bordignon, director of the economics and finance department at the Catholic University of Milan, told Xinhua.

Difficulties remain considerable for the struggling eurozone economies, Bordignon said. Yet, he stressed, the EU institutions have the role to deliver the message that growth, maybe not robust but sufficiently solid, is possible and must be pursued at all costs to revive hope of million citizens in Europe.

The EU presidency sets the agenda of the EU Council and presides over all the meetings, negotiating compromises. Italy has held the presidency 12 times since the establishment of the European Community in 1957. Endit