Monti, Barroso differ from Hollande on growth

(BRUSSELS) - Italian premier Mario Monti and European Commission chief Jose Manuel Barroso warned Friday against growth measures that fuel debt, in a veiled rebuff of French presidential frontrunner Francois Hollande.

The pair held a breakfast meeting in Brussels a day after separately contributing to a conference on how to revive eurozone growth, and issued a joint statement that serves as a marker for EU plans ahead of a June summit.

"We agreed that the revival of growth must come through a relentless focus on improving competitiveness and not through higher levels of debt," they said.

"Fiscal consolidation should therefore proceed alongside targeted investments, to enhance competitiveness while also contributing to increasing demand in the short-term."

Monti told Italian media during his Brussels trip that this could mean taking "an appropriate stance regarding investments... not as a way of eluding fiscal discipline but to make it really sustainable in the long term."

Italian sources said Monti has long favoured that major one-off government projects deemed strategic be treated separately from normal deficit accounting.

A serious push in this direction, which Hollande would likely seize upon, would however re-open old sores with Germany who has always resisted such a feature.

Socialist Hollande, who pipped President Nicolas Sarkozy in Sunday's first round of the French election, said earlier this week that French voters had succeeded in imposing his ideas on EU partners.

The French presidential run-off takes place on May 6.

Before the first vote, Hollande had vowed to renegotiate a German-inspired eurozone fiscal pact so as to include growth measures.

His emphasis received something of a boost on Wednesday when European Central Bank chief Mario Draghi called for a "growth compact" to complement the eurozone's fiscal compact.

But German Chancellor Angela Merkel repeated on Thursday her opposition to revisiting the pact, which was signed by 25 of 27 EU states.

And Hollande himself has since suggested he may be looking more for a growth annex to be tacked on.

Voters are fed up with the pace of austerity they see as responsible for plunging the eurozone back into recession two years after the sovereign debt crisis first bit.

But Brussels appears to have closed ranks behind its existing economic strategy -- with only minor concessions.

Monti and Barroso said the real work -- which each said would only pay off in the medium term -- should focus on turning cross-border "single market" rhetoric into reality.

"There should be faster and more effective progress in the digital, energy and services sectors," the two said.

They agreed to meet again on May 15, when Monti is already scheduled to be in Brussels for talks with fellow finance ministers.

EU president Herman Van Rompuy has said he may convene a dinner of leaders in advance of their next scheduled summit on June 28-29, at which the growth debate would dominate -- especially if Hollande is elected.

However, he warned Friday in his letter inviting leaders to the summit that "there are no quick-fix solutions."

While "sustainable growth" is the goal for all, "fiscal consolidation is the bedrock on which we must develop a comprehensive strategy" to get there, he insisted.

He said the seven-year 2014-2020 EU budgetary cycle might offer scope for the sort of targeted investment sought by Monti.