Merkel and Monti try to inspire hope

 
Tim Wallace
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SPENDING cuts and economic reforms are making Italy stronger and provide a vital contribution to the stability of the euro, Angela Merkel announced yesterday as she and Italian Prime Minister Mario Monti (both pictured below) tried to persuade investors that Italy was no longer a risky place to put cash.

“High interest rates could have been justified when markets were diffident about Italian economic policy, but not anymore,” Monti said.

He has previously complained his government’s efforts had “not received the recognition and appreciation they deserve.”

The two leaders met to discuss how to resolve the Eurozone crisis and encourage longer-term economic growth.

Monti gave his backing to an EU-wide financial transactions tax, which Merkel and French President Nicolas Sarkozy both support.

Laying out his view for a prosperous future, Monti returned Angela Merkel’s praise, describing Germany’s economy as “concrete proof of how public budget discipline and an economy founded on market principles are the best for growth.”

Meanwhile, official data showed Italy’s budget deficit fell to 2.7 per cent of GDP in the third quarter of 2011, and Germany’s economy contracted by 0.25 per cent in the final quarter, though it displayed growth during the other three.