US President Barack Obama and Italian Prime Minister Mario Monti agreed on Tuesday on the need to “intensify” growth and job creation, as Washington prepared the ground for this week’s G8 summit.
The leaders spoke by telephone ahead of the two-day meeting beginning at Camp David, Maryland on Friday, and also discussed strategy in the war in Afghanistan ahead of the NATO summit in Chicago starting on Sunday.
The call was the latest sign that momentum may be growing behind a push to emphasize the need for growth in the stricken eurozone, which is struggling to emerge from its economic crisis after several years of austerity policies.
Conversations about the need to spur growth as well as to cut spending were also enlivened by the election victory of French President Francois Hollande, who met austerity champion German Chancellor Angela Merkel on Tuesday.
Obama and Monti “discussed the current economic situation in Europe and agreed on the need to intensify efforts to promote growth and job creation,” the White House statement said. “The president looks forward to discussing these topics in further detail with the prime minister during the upcoming meeting of G8 leaders at Camp David this weekend.”
The discussion between Obama and Monti on Europe’s woes came on a day when Greece said it would likely hold new elections on June 17 after efforts to form a government after inclusive polls foundered.
Merkel said she and Hollande wanted Greece to stay in the euro, despite growing signs a voter rebellion over austerity could force it to pull out.
Paris and Berlin were also prepared “to study the possibility of additional growth measures in Greece” if Athens said they needed them, she said.
Meanwhile, Italy’s banking and business leaders attacked Moody’s mass downgrade of Italian banks on Tuesday, branding the move an irresponsible blow to the economically strapped country while it battles eurozone debt woes and economic recession.
Moody’s downgrade of 26 Italian banks is the first round of a wave of credit rating cuts that is expected to hit dozens of eurozone lenders, adding to their difficulties in raising funds and exacerbating an existing credit crunch.
The move, which Moody’s pinned on a weakening operating environment made worse by Monti’s tough austerity cure, came amid growing calls within the eurozone for a shift toward growth after months of strict fiscal discipline.
“Moody’s decision is an assault against Italy, its companies, its families,” Italian banking lobby ABI said. “Once more rating agencies turn out to be a destabilizing factor for financial markets with their partial and contradictory statements.”
Big business lobby chief Emma Marcegalia said she was concerned by such an “attack against Italy” and ABI head Giuseppe Mussari asked the European Central Bank and other European institutions to ignore the downgrade to avoid heightened funding strains and spiraling sovereign debt woes.