13 January 2013

FT: Italy's Democrats extend olive branch to Monti

Italy's Democratic party, whose centre-left alliance is favourite to win February's general election, has extended an olive branch to Mario Monti, praising his government for restoring Italy's credibility and saying their parties should cooperate after the election.

Stefano Fassina, economic spokesman for the Democrats, also said that a centre-left government would not try to revive the ailing economy by boosting government spending unilaterally. The Democrats would instead seek a grand bargain at the European level, which could give Brussels sweeping veto powers over national budgets in exchange for less austerity.

The Democrats intend to avoid attacking Mr Monti during the campaign, instead aiming at the “new populism” of Beppe Grillo’s Five Star Movement and the “old populism” of the centre-right alliance between the Northern League and Silvio Berlusconi’s People of Freedom. “We are together with Mr Monti with respect to the main division line that divides the populists from the Europeists. We share common ground on the main themes, such as constitutional reforms, Europe and the need for some structural reforms.“

Mr Fassina ruled out Italy reneging on its European commitments to expand domestic demand under a centre-left government. “We will not renegotiate the fiscal compact or our balanced budget amendment in the Constitution. If we acted unilaterally, we would damage the European project. We want to have more room for counter-cyclical fiscal policy, but at the European level.”

He denied this would allow Italy to dodge structural reform. “This is not to avoid doing our homework. The structural reform agenda should move on.“ But Mr Fassina said he saw no reason for the centre-left to pass a new labour market reform, following the one approved by Mr Monti’s technocratic government last year.

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