Monti urges end to EU rigidity, warns of voter backlash

(BRUSSELS) - Outgoing Italian premier Mario Monti urged EU partners on Thursday to grant Italy and other countries facing pressures on public finances leeway to spend for jobs -- or face a voter backlash as he did last month.

In a written plea to be freed from European Union reforms and fiscal discipline dictated by markets -- a message that diplomatic sources said came "too late" -- Monti warned that Brussels was in danger of losing popular trust.

He said his caretaker Italian government had done everything asked of it by EU peers, but that "public support for the reforms, and worse, for the European Union, is dramatically declining."

He said this was "following a trend which is also visible in many other countries across the Union."

He underlined: "The Italian experience shows that market pressures and public finance imperatives are a driver for overdue action -- but a more comprehensive strategy is needed to ensure the success of economic adjustment over a prolonged period of time."

In something of a U-turn from his public position in office, Monti argued that "at this juncture, we believe that Italy, which lived up to its commitments, should use any possible extra margin allowed by the (EU's Stability and Growth) Pact to implement an urgent plan to support the creation of stable and better jobs."

He said that even governments in breach of deficit targets should be allowed to spend on "targeted actions to support the economy," incentives including cutting taxes on new permanent contracts, encouraging apprenticeships and strengthening child-care services.

He concluded: "Taking effective action to revive growth and fight long term and youth unemployment would be the best message to counter the mounting wave of populism and disaffection with the European Union."

Only this, he said, would show "that Europe is listening to people's concerns and can be a partner in building a more fair and prosperous future for all."

At the close of the first day of talks among EU leaders dedicated to the economy, EU President Herman Van Rompuy said leaders had "reconfirmed our overall economic strategy."