Italian Prime Minister Matteo Renzi called for a change of course in Europe.

He said that austerity policies on their own could not guarantee fiscal stability in the face of rising unemployment and economic stagnation. 

Renzi was speaking ahead of this week's European Union summit.

He said Italy was not asking for a relaxation of EU budget rules but for existing rules to be flexibly applied in exchange for commitment to a package of domestic structural reforms that Italy would achieve by 2017. 

"It is obvious that the trade-off between the reform process and the use of the margins for flexibility which already exist and which are available to member states is what has always happened," he said.
Renzi said that when Italy takes over the rotating EU presidency next month, he would outline a "1,000 day" programme for which he would seek parliamentary approval and that would be achieved by May 2017. 

Speaking as leader of a country that has seen no economic growth for more than a decade and that has a youth unemployment rate of over 40%, Renzi said the "high priests" of austerity risked condemning Europe to stagnation. 

"The treaty obliges us to look at growth and stability as elements which go together. There can be no stability possible if there is no growth in Europe and economic policies of recent years have failed because of this," he said.
Renzi said the discussion on the next president of the European Commission, one of the main sticking points before the June 26/27 summit, had to take account of the result of last month's European parliamentary elections in which the centre-right took the most seats.
But it could not be a simple matter of following the election result, he said.

The process of appointing the next Commission president, one of the most powerful positions in the 28-member bloc, has been overshadowed by Britain's fierce opposition to former Luxembourg Prime Minister Jean-Claude Juncker, the Brussels insider backed by most other member states.
Renzi, who attended a meeting of centre-left leaders in Paris on Saturday which agreed to back Juncker, said the decision on the presidency had to be part of a broad discussion on policy and on who should fill other top bloc posts, including head of the European Council or the foreign affairs chief.
"It's impossible to imagine a process that stops Europe having a broad overall view," he said.  

Hollande urges 'flexibilities' in applying EU budget rules

Meanwhile, French President Francois Hollande called today for "flexibilities" in applying EU budget rules. 

"France proposes that budgetary rules be applied in a manner favourable to investment and employment," Hollande wrote in a letter to European Council President Herman Van Rompuy, in extracts published in daily Le Monde.

"It is about taking full advantage of flexibilities to take into account reforms undertaken by countries and their economic situations," he wrote.

Hollande and Renzi have been pushing for a rethink of the EU's strict budget policies and German-backed austerity efforts ahead of a key summit that starts in Brussels on Thursday.

France and Italy have denied seeking to change the rule that budget deficits should not exceed 3% of annual gross domestic product, but have repeatedly called for more leeway in how it is applied.

In the letter to Van Rompuy, Hollande said the foundations had been laid for an economic rebound in Europe but a "deeper discussion" was needed on budgets.

"The goal is to guarantee a balanced budget policy for the eurozone," Hollande said.

He said the impact of national decisions on the whole EU also needed more study, raising concerns about "weak inflation".

Hollande also called for increased coordination of social policies across the 28-member bloc, for example with a Europe-wide minimum wage and minimum levels of corporate taxes.