EU needs new economic model: Italy finance minister

(ROME) - Italy's Finance Minister Giulio Tremonti said Tuesday that after the crisis Europe needs to think of a "new economic model geared more towards public investment."

"We need to re-balance towards public demand a model that was mostly based on private demand" with public investments in energy, environment and infrastructure, Tremonti told a group of foreign journalists.

Tremonti also warned against the risks of export-based economies, saying that "the economies that most relied on exports felt the crisis the most. We saw demand shrink by 70 billion euros, which is a lot for the Italian economy."

On the possibility of concretely helping Greece come out of its debt crisis, Tremonti said "there is no Italian position, there is only the demand for a common European position."

Tremonti also gave an upbeat view of Italian debt while reassuring that Italy will not relax its fiscal regime.

"We have a large public debt, but we also have great private surpluses. The wealth accumulated in the country during so many years, an inclination towards saving, make up for a solid financial situation. Unlike many other countries, we have a public debt, but we don't have indebted families," he said.

Italy's public debt has been among the highest in the world for years, ballooning 5.8 percent in 2009 to 1.76 trillion euros (2.4 trillion dollars), some 115 percent of gross national product in 2009

That ratio will near 117 percent of GDP this year, according to government forecasts.

Tremonti said that while the Italian government is planning fiscal reform, because of its debt, Italy had no "alternatives to the criterion of rigour and to the constraints that we have voluntarily taken up in Europe. We are well aware of the reality of the markets."