Recession if Italy holds snap elections: ex-PM Renzi

Snap elections called for by far-right leader Matteo Salvini would plunge Italy into recession, former Democratic Party (PD) premier Matteo Renzi warned Tuesday, calling instead for a transitional government. Addressing journalists in Rome, he also pledged unity with PD party leader Nicola Zingaretti amid rumours that Renzi could split and form his own party after Salvini pulled the plug on the current coalition. "If there's an election (in October), I don't know if the PD would take 25 percent but what's certain is that VAT would rise to 25 percent," the centre-left Renzi said at the Senate. "It would be a disaster for the country," said Renzi, who governed for the PD from 2014-2016. He spoke ahead of a Senate debate on a possible no-confidence vote in the 14-month old government that could prompt elections. "Italy would certainly go into recession. Especially with the trade tensions between the US and China and what's happening with the German economic locomotive," Renzi said, referring to sluggish economic growth and investor confidence in Europe's largest economy. Salvini's bid to bring down the government in the eurozone's third economy has so far floundered, partly because elections would put the crucial 2020 budget on hold. While Salvini has said he would not mind Italy's deficit rising even further in defiance of European Commission rules, the government must find 23 billion euros (25.7 billion dollars) to keep a promise to avoid an automatic VAT rise from 22 percent to 25 percent in January. A rise in VAT would hit the poor the most, and Italy is already on the brink of recession. Renzi also promised to unite his supporters with those of PD secretary Zingaretti following an appeal from party leaders. "The secretariat of my party has asked that there be unity... I believe that they are understandable requests and absolutely to be accepted," he said. "Lawmakers must today say that Salvini is in the minority," Renzi said, suggesting that even League leaders were surprised at how the crisis has unfolded negatively for them. "We have the chance to turn the page," Renzi said, extending a hand to the Five Star Movement which had been governing with the League and could now potentially form a new administration with the PD. Former Italy's prime minister Matteo Renzi warned the country could go into recession