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Published: Friday July 4, 2014 MYT 8:40:02 PM
Updated: Friday July 4, 2014 MYT 8:41:13 PM

Renzi says no budget rift with Germany, raps Bundesbank

ROME (Reuters) - Italian Prime Minister Matteo Renzi said on Friday that there was no rift between Rome and Berlin over European fiscal policy and that Germany's central bank should not comment on Italian government policies.

"I haven't seen any polemic with German politicians," Renzi said at a news conference to launch Italy's 6-month presidency of the European Union, when asked to comment on reports of a rift with Germany over the scope for budget flexibility.

"If you are referring to the comments of some German banker," Renzi continued, "the Bundesbank's job is to ensure respect of its statutes, not to participate in Italy's political debate."

He added that "Europe belongs to its citizens, not to bankers, either Italian ones or German ones."

On Thursday Bundesbank chief Jens Weidmann said Italy should complete structural reforms before calling for increased budget flexibility.

Renzi, speaking at a joint news conference with outgoing European Commission President Jose Manuel Barroso, said he had an "excellent" relationship with German Chancellor Angela Merkel and he had "very much appreciated" comments by her spokesman earlier on Friday.

Italy, which is pushing for greater flexibility in European budget rules to allow it to spend more, has the second-highest public debt in the euro zone as a proportion of national output, after Greece.

Renzi, who came to office in February, has an ambitious agenda of political and economic reform, including changing Italy's electoral law, abolishing the upper house Senate as an elected chamber, and simplifying labour market rules.

However, so far he has made little progress in turning his plans into approved legislation, and none of his reforms have been completed.

Renzi, whose Democratic Party won a resounding victory in elections for the European Parliament in May, has repeatedly called for a shift towards more growth oriented policies in the euro zone.

"In Europe the rules must regard stability but also growth," Renzi said. "The moment we only discuss stability we are destroying a piece of our future."

(Reporting by Luke Baker and Gavin Jones; Editing by Hugh Lawson)

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