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Published: Wednesday December 4, 2013 MYT 4:20:02 AM
Updated: Wednesday December 4, 2013 MYT 4:21:15 AM

Italy left's likely new leader sceptical on EU budget cap

ROME (Reuters) - The likely new leader of Italy's left on Tuesday called European Union budget deficit limits outdated and said he would not feel compelled "to follow Europe if it's in the hands of bureaucrats".

Florence mayor Matteo Renzi, the candidate set to win a Sunday primary to lead the Democratic Party (PD), replied "absolutely" when asked in a TV interview if an EU deficit ceiling of 3 percent of gross domestic product should be re-negotiated.

Italy's most popular party by a small margin according to recent polls, the PD is currently in a ruling coalition led by one of its number, Prime Minister Enrico Letta.

An indication from the person who has a chance of succeeding him that he might be less concerned about fiscal rigour could concern international markets and the EU.

"It's a constraint that dates back to ... when the European economy was still growing, it was another world," Renzi said in an interview with the national broadcaster RAI, referring to the debt ceiling.

"Like heck I'll continue to follow Europe if it's in the hands of bureaucrats."

The finances of Italy, which has a public debt second only to Greece in the EU as a percentage of GDP and which skirted financial disaster in 2011, are closely watched as a flash point for euro zone instability.

The country was released from special EU monitoring of its finances earlier this year after cost-cutting by the previous administration of Mario Monti, but the European Commission last month warned Letta's 2014 budget risked breaking the rules again.

Renzi said the 3 percent ceiling should not be allowed to constrain spending on education or policies to spur growth.

The charismatic 38-year old has 66.6 percent support to win the Sunday primary to elect a PD leader His nearest rival scored just 20.7 percent in a survey published on Monday by pollster Quorum for Europa magazine.

Past polls have shown Renzi to appeal to centre-right voters as well as the PD, making him a strong candidate to take on the second and third most popular parties, Beppe Grillo's anti-authoritarian 5-Star Movement and Silvio Berlusconi's Forza Italia at national elections.

(Reporting by Silvia Ognibene; Writing by Naomi O'Leary; Editing by Robin Pomeroy)

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