ROME (AP) — Italian Premier Mario Monti, flanked by German leader Angela Merkel, urged Europe on Tuesday to focus as much on growth as it has on battling debt threats, especially as the financial crisis shows signs of easing.
Italy has seen its borrowing rates fall this year, thanks largely to emergency loans that the European Central Bank gave to the financial sector. But Monti warned the government needed to press ahead with its wide-ranging program of growth-enhancing reforms and deficit-cutting savings measures.
"We cannot relax at all, both in domestic policies and in European policies," Monti told reporters after he held private talks with Chancellor Merkel at the premier's office in Rome.
"The European Union must enter in a phase giving the same attention to growth, especially in youth employment," Monti said.
Merkel stressed that the EU "needs growth and competitiveness" and must "defend itself from emerging powers'" economies.
"Europe has gone a long way down the road, but we haven't reached the summit yet," Merkel said.
Germany "followed with great attention the courageous reforms that Monti carried out," Merkel said. She was referring to the combination of new taxes, pension reform and growth-inducing measures that Monti, an economist by training, quickly shepherded into place since being tapped as premier in November to save Italy from financial disaster as its borrowing costs spiraled rapidly upwards.
Earlier in the day, Italy easily raised euro12 billion ($15.74 billion) in a short-term bond auction that saw borrowing costs drop again.
The country paid a rate of 1.4 percent to sell euro8.5 billion in 12-month bonds. That is down from 2.23 percent in a similar sale last month and is further evidence that market pressure is easing on Italy.
The country also sold euro3.5 billion in three-month bonds, paying 0.492 percent compared with 1.8 percent at the last similar auction in September. Demand was more than twice the offer.
Colleen Barry contributed from Milan.