Italy on Thursday asked the European Union to push back a deadline for cutting its public deficit to 2016, days after France reportedly tried and failed to get another extension.
Finance Minister Pier Carlo Padoan said record unemployment and weak growth -- exasperated by measures to pay tens of billions of euros of overdue arrears to companies -- were making it difficult to cut Italy's towering debt.
"Despite the positive signs, the economic recovery is still fragile and the situation in the job market is still difficult," he told parliament.
"To help the payment of civil-service debts, the government intends to made use of the exception procedure" which allows a delay in meeting the deficit target, he said.
Prime Minister Matteo Renzi's new government is struggling to boost growth in the eurozone's third-largest economy, which is exiting the worst recession since World War II.
The government cut its growth forecast for this year to 0.8 percent and raised its 2014 deficit target from 2.5 percent of output to 2.6 percent.
Padoan said corrective action and privatisations would rapidly reduce public debt from next year, putting Italy back on schedule to meet its longterm EU-agreed target of a debt-to-GDP ratio of 60 percent.
- Playing for time -
Italy's request came days after France dismissed reports it had been angling for a delay in meeting its deficit reduction target.
Both France and Italy, burdened with high debt levels and record-high unemployment, have been trying to balance the need to boost growth and appease their political parties with European Union demands that they cut debt.
Renzi last month laid out his position by backing a shift from austerity to growth, including a 10 billion-euro tax cut for Italy's low-income families and a 10-percent cut in a payroll tax.
France this week seemed to take a step in the opposition direction, with Finance Minister Michel Sapin and President Francois Hollande's spokesman denying Paris was seeking an extentions to meeting its deficit reduction target.
The European Union in June agreed to give France an extra two years, until 2015, to bring its deficit under the ceiling of 3.0 percent of economic output -- but strong doubts remain over whether the French government can make good on its promise.
The 18 countries in the single currency are required to stick to strict debt and deficit ceilings and to submit draft budgets and data to the Commission, which polices the guidelines and can sanction any nation in breach of them.
As Italy played for time, other EU countries said they would adopt new measures to bring their deficit target in line with Brussels demands.
EU's newest member Croatia on Thursday said it would raise taxes on petrol and telecoms despite fears that they could stifle growth.
Earlier this week, Portugal laid out savings designed to strip 1.4 billion euros ($1.9 billion) from its budget in the latest step to trim its public deficit.
Forced to seek a bailout in 2011 after decades of ballooning wages and state spending led to a massive build-up of public debt, the country is now preparing to return to the mainstream bond market on Wednesday.