Italy, Spain urge common economic governance in eurozone

10th June 2010, Comments 0 comments

The prime ministers of Spain and Italy jointly called for stronger economic governance in the eurozone on Thursday as market worries about both countries' public finances have taken a toll on the euro.

"The eurozone needs to strengthen its common economic governance," Spanish Prime Minister Jose Luis Rodriguez Zapatero told a news conference after meeting his Italian counterpart Silvio Berlusconi in Rome.

"We agreed that from now on, there should be attentive governance of the situation for the common currency," Berlusconi said.

Investor worries over Europe's highly indebted eurozone economies after the Greek debt crisis sent the euro tumbling in recent weeks to below 1.19 dollars for the first time in more than four years.

"We have to protect the euro from all international speculation," Berlusconi said, adding that Europe has so far behaved well in defending the currency.

Spain is under scrutiny from markets because its public deficit soared to 11.2 percent of gross domestic product in 2009, the third-highest level in the eurozone after Greece and Ireland and way above the three percent limit.

"We have great faith in Spain and in its economy," said Berlusconi.

Spain's public debt stands at 53 percent of GDP, "a situation that unfortunately is very different from that of Italy, which has a public debt of 115 percent, more than double that of Spain," Berlusconi said.

Italy's debt is expected to hit 118.4 percent of GDP in 2010, according to finance ministry estimates.

Italy and Spain -- along with most other European countries in recent weeks -- have approved broad austerity measures, slashing state budgets to reassure markets over their public finances.

"There is no national exit but a European exit" from the economic crisis, Zapatero said.

Earlier Thursday, Zapatero met Pope Benedict XVI and Vatican Secretary of State Tarcisio Bertone in his first visit since Benedict was elected in 2005.

© 2010 AFP

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