Italy's former PM Renzi sets out new economic agenda in book

Then Italian Prime Minister Matteo Renzi speaking during a press conference in Rome on June 20, 2016.
Then Italian Prime Minister Matteo Renzi speaking during a press conference in Rome on June 20, 2016. PHOTO: REUTERS

MILAN (REUTERS) - Former Italian Prime Minister Matteo Renzi said he would ask the European Union for less stringent deficit requirements for five years in exchange for a commitment to improve the country's debt pile if re-elected.

Renzi said he would keep the national deficit at 2.9 per cent, just a notch under a EU ceiling of 3 per cent, but would use an estimated 30 billion euros to cut taxes and push growth, in excerpts of a new book which were released by daily Il Sole 24 Ore on Sunday.

The 42-year-old resigned as prime minister in December after a crushing defeat in a national referendum over constitutional reforms aimed at streamlining the country's lawmaking process.

He was replaced by his foreign minister, Paolo Gentiloni, but kept his position as head of the ruling Democratic Party (PD) and has been working on a political comeback since stepping down. "A strong agreement in which Italy commits to reducing its debt to GDP ratio through stronger growth.... in exchange for a return for at least five years...with deficit at 2.9 per cent," he wrote, adding this would be the PD's agenda for the next general election, due by May 2018.

Italy has an official 2017 target of bringing the deficit down to 2.1 per cent of GDP, from 2.4 per cent in 2016.

But the European Commission says Italy needs faster deficit reduction to bring down its overall debt pile which is the highest in the euro zone after Greece's. "I do not accept that Italy is treated like an undisciplined scholar that must be told to behave. This is an attitude that hurts Europe... which becomes an unpleasant watchman," Renzi writes.

Italy's economy has been the most sluggish in the euro zone for more than a decade, and the government's 1.1 pe cent growth forecast for this year would be only about half the average expected for the region as a whole.

Renzi's PD party fared badly in local elections last month, but polls show his party is still one of Italy's most popular nationally, just behind the anti-establishment 5-Star Movement.

But with internal party rifts and Renzi's confrontational style, there is no guarantee that he would be named prime minister of a future coalition government even if the PD were to win the most votes during the election.