Monti calls on EU to reduce borrowing costs

Italian Prime Minister Mario Monti called Tuesday on the European Union to recognise efforts made by countries to overcome the economic crisis by moving to bring down punishing borrowing costs. "As (countries) get economic policies underway, the EU must acknowledge it in order to put a stop to the serious obstacle of spreads that have no reference to the economy's health," he said after talks with Francois Hollande. The difference in the borrowing costs, known as a spread, between struggling countries such as Italy and Spain and those of financially stable Germany widened to record levels earlier this year as worried bond investors decided to lower their risk exposure. While it is necessary that countries "do their homework, it is not sufficient," Monti said. Italy has imposed austerity measures and passed a wide range of reforms but is still vulnerable to punishment on the markets. The French President and Monti repeated their intention to push hard for the implementation of measures adopted at the European summit in June, and briefly touched on some of the latest developments in the eurozone economic crisis. Hollande reiterated his hope for clear decisions to be taken on Greece and Spain, two of the most vulnerable countries in the eurozone, at an October summit in Brussels, and laid out a three-point plan to tackle the crisis. "We have identified three stages for the eurozone: implementing the decisions of the European Council, resolving the problems in Greece and Spain and create a banking union," he said. "If we want to re-establish trust, we must not have any doubts about the eurozone," Hollande said. Spain's plight has once again risen to the forefront of the three-year crisis and Greek leaders are scrambling to unlock crucial loans needed to avert bankruptcy -- raising fears once more of a eurozone inching towards a possible breakup. Referring to Athens' fragile membership to the eurozone, Hollande said that "if the troika report demonstrates their efforts and credibility, then without putting in new money we can apply the plan and keep Greece in the eurozone." A positive report from the so-called troika of creditors is essential for Greece to get the next 31.5-billion-euro instalment of funds to keep it afloat. When called to comment on high unemployment levels, both Monti and Hollande said the goal of all the proposals they had discussed was growth. "By speaking about the spread, we are speaking about jobs and about not penalising businesses and citizens. Italy has passed many reforms to allow the younger generations to breath, like the pension reform," Monti said. Hollande said unemployment in France, which passed the symbolic number of three million registered jobseekers on Sunday, would be urgently tackled. The leaders said France and Italy would hold another bilateral summit in Lyon at the start of December. The meeting with the French president in Rome came just two days before a key European Central Bank meeting at which the central bank may announce a new round of bond purchases to ease borrowing costs for struggling countries. Both Monti and Hollande refused to comment on the possible ECB intervention in order to respect the bank's independence, with the French president quipping that "the best comment I can make on the issue, is to say nothing at all."