EU growth forecasts show German prudence not working, Italy says
By Stephen Brown
BERLIN (Reuters) - The latest reduction in growth forecasts for the euro zone proves that Germany's and the outgoing European Commission's "prudent" approach to investment has failed and must be exchanged for pro-growth policies, a senior Italian official said on Tuesday.
"Today's economic forecasts are good news, because they confirm that the approach is wrong," Sandro Gozi, the Italian cabinet's undersecretary for European affairs, said in Berlin.
"And because the approach is wrong, not only for my country but for the euro zone overall, we hope that we see from Brussels more effectiveness and policies more adapted to the economic reality of the euro zone," Gozi told reporters.
The European Union's executive said on Tuesday the euro zone economy would not reach 1.7 percent growth - which it had targeted for next year - until 2016. It blamed the recovery's delay on the French and Italian economies.
Gozi said he agreed with the European Commission's outgoing economics chief, Jyrki Katainen, that Germany, Europe's biggest economy, should invest more. He planned to reiterate is view to his German counterpart, Michael Roth, in talks later on Tuesday.
But Angela Merkel once again ruled out any German spending spree, even though German growth is also slowing. The chancellor is increasingly isolated for insisting on balancing her budget in 2015 even as the 18-member euro zone holds back a broader global revival led by the United States.
"The isolation of the European Commission and of certain European governments on the global scene is worrying," said Gozi, referring to preparations for a G20 summit in Australia.
Boosting internal demand and investment was "almost common wisdom" except for the outgoing EU Commission of Jose Manuel Barroso, which took a "more prudent" approach - "and there is more prudence on the part of the German government," he said.
Incoming Commission chief Jean-Claude Juncker's 300 billion- euro plan to boost growth must not go "missing in action" like a similar plan under Barroso, and states with more resources like Germany should focus more on new investment, Gozi said.
(Reporting by Stephen Brown; Editing by Larry King)
