Italy for German policy change

Italian Prime Minister Enrico Letta told reporters at home it was in Berlin's interest to ensure that economies across the continent pulled out of recession.

"The hope is that the new German government brings economic policies which consider that recovery in Europe is a priority for Germans as well," Letta said in verbal broadside to what Rome believed was German Chancellor Angela Merkel's infatuation with austerity measures in dealing with the aftermath of the global financial crisis.

Italy has been in the forefront of nations pushing Berlin for an easing of the strict austerity course imposed on debt-stricken nations, saying harsh spending cuts have been responsible for protracted recession and stubbornly high unemployment.

Germany to blame?

Italy had been forced to embark on an austerity course in a bid to control its high debt levels, amounting to about 130 percent of its gross domestic output. The country's GDP shrank by quarterly rate of 0.5 percent in the first three months of the current year.

"If there's growth and stability only in Germany and the rest of Europe is left out, in the end that will be bad for Germany as well," Letta said as government-forming coalition talks continued in Berlin.

The Italian government forecast a 1.8 percent economic contraction throughout this year. Its 2014 projection of growth above 1 percent is considered far too upbeat by the majority of independent forecasters.

Giorgio Sangalli, head of Italy's main retail organization, Confindustria, said Monday companies in the sector had no strength left from north to south and predicted "2014 certainly won't be the year of a substantial recovery."

hg/hc (Reuters, AP)