Letta visits Hollande – How to Rekindle Growth in Europe?

The new Italian Prime Minister Enrico Letta visited Francois Hollande, President of France, on May 1. As leaders of two countries which are struggling to rekindle growth in Europe in the middle of a three-year old crisis, the two presidents agreed that the austerity measures put forward mainly by Germany are not enough to get Italy and France out of the economic slump.
Letta’s statements highlight the importance of tackling unemployment and fomenting economic growth to avoid the voters’ reaction against a European Union which did not provide any answers or solutions. He stated that the reaction could certainly lead to a “big democratic problem”. Hollande, on the other hand, said that the problem goes beyond the EU as an institution, as it could affect the political stability of both Italy and France.

Eurozone’s Divided Perspectives

Recent warnings from the International Monetary Fund state that if the Eurozone does not focus on growth again, the consequences could lead to a negative, endless feedback loop. The main division as to what should be the next step lies between those countries like Germany which insist on spending cuts, and those other countries, such as Italy and France, which fully support the creation of European banking union as a single supervisory mechanism for next year.
Germany’s reaction against this measure is based on its fear that the union would mean extra costs to help other European nations out of their deep crises. President Letta, on the other hand, is counting on the creation of the new banking system to create new job opportunities and foment the growth of industries with lower interest rates. Letta’s other aim is to cut down on taxes; to this aim he has already suspended an Italian property tax which had fuelled a strong reaction on the part of the citizens against its politicians. Whatever measures the Italian President decides to implement, he has assured the other members of the European Union that Italy will stick to its budget promises.

Unity in spite of the Disagreements

President Hollande has actively sought to affirm France’s unity with Germany, even if both countries had opposing views as regards the measures that should be taken to make the European Union work again. He stated that the two countries should work together no matter the situation and disregarding any sensitivity. Hollande emphasized that, whatever the problem, a compromise could surely be found.