Italy's Renzi takes fresh swipe at Europe after Spanish vote

ROME (Reuters) - The failure of Spain's People's Party to regain power at weekend elections shows the shortcomings of EU-driven austerity at both a political and economic level, Italian Prime Minister Matteo Renzi said on Monday. "It is going to be interesting to see if Europe will now realize that a short-sighted policy of (economic) rigor and austerity leads you nowhere," Renzi said in his latest attack on decision-making within the European Union. The People's Party (PP) won the most seats in Sunday's vote, but did not secure an outright majority meaning Prime Minister Mariano Rajoy, a firm proponent of austerity, has no guarantee of retaining power. The result followed ballots earlier this year in Portugal and Greece which also saw the ousting of parties that had pursued economic belt-tightening. "As has already happened in Greece and Portugal, governments which apply rigid austerity measures ... are destined to lose their majority," Renzi wrote in an email to party supporters. "The economic policies thought up in these years by Europe do not help its citizens, and, paradoxically, punish those who pursue them," he said. Renzi has grown increasingly vocal in his opposition to what he views as German dominance over the European Union, particularly when it comes to economic policy making, and has called on other EU nations to stand up to Berlin. Traditionally one of the most pro-European nations within the 28-nation bloc, Italy has become frustrated by what it sees as overly zealous demands from Brussels as the country struggles to shake off its longest economic downturn since World War Two. The Italian parliament is expected to approve later this week a budget for 2016 which includes a higher-than-forecast deficit. It is not yet clear whether the European Commission will agree to the revised target or demand a rethink. "I am not fighting against Europe, as some commentators have written. I am fighting for Europe, but a social Europe which supports culture, innovation and employment. Not a Europe of only numbers, parameters and constraints," Renzi wrote. Renzi's center-left Democratic Party has slipped in the opinion polls this year, and although it is still Italy's leading political force, it is facing a growing challenge from the anti-establishment 5-Star Movement, which wants Italy to leave the euro currency. (Writing by Crispian Balmer; Editing by Richard Balmforth)