Spain and Italy on Monday pledged to join forces to push for a banking union at the European Union summit in June, dpa reported. "A banking, fiscal and monetary union needs to move faster," Spanish Prime Minister Mariano Rajoy said at a joint press conference with his Italian counterpart, Enrico Letta, in Madrid. Letta said: "We decided to create a bank union and then nothing is done. This is a Europe that loses credibility." The two leaders also stressed the need to combat youth unemployment and to accompany austerity policies with measures to boost growth. Reforms in Spain and Italy "must be accompanied by reforms in the EU and by reforms spurring growth," Rajoy said. Italy is facing "at least" two more quarters of negative growth, according to the country's statistical agency. Gross domestic product (GDP) in the eurozone's third-largest economy is set to contract by 1.4 per cent this year, Istat said. Meanwhile, the jobless rate was projected to rise from 10.7 per cent in 2012 to 11.9 per cent this year and 12.3 per cent in 2014. Letta has pledged to respect EU deficit-trimming targets, but wants to shift away from austerity, and has promised to cut taxes, including an unpopular levy on properties. Rajoy remains on the austerity path, with new budget cuts due to trim the local administration worth 8 billion euros (10.4 billion dollars). But the government has also announced some measures to boost growth, such as tax incentives for companies. The European Commission expects the eurozone's fourth-largest economy to shrink by 1.5 per cent this year. Unemployment has soared to 27 per cent. Letta was in Madrid as part of a European tour that previously took him to Berlin, Paris and Brussels.
