Merkel has 'great respect' for Italy austerity plan

German Chancellor Angela Merkel said Wednesday she had "great respect" for Italy's biting economic reforms and that it would be "rewarded" for them, as the crisis-hit country battles to slash its debt. "As for the speed and substance of these measures, I think they will strengthen Italy, will improve its economic prospects and we have watched with great respect how quickly they have been implemented," Merkel said after meeting Italian Prime Minister Mario Monti. "I think that overall, the work of the Italian government will be rewarded and I have said from the beginning that we should work very, very closely together," the chancellor added. For his part, Monti said he hoped that "the implementation of good policies would translate to sensible rates" as Italy's borrowing costs remained stubbornly above the seven-percent mark seen as unsustainable. Earlier Wednesday, Monti had complained in a newspaper interview of possible "anti-European" protests in his country if Rome's reform efforts were not recognised. Speaking in German daily Die Welt, Monti complained: "The problem is that despite our sacrifices, we have not got anything in return from the European Union, such as a drop in interest rates. "Unfortunately, we have to say that our reform policies have not received the recognition and appreciation in Europe that they deserve," the prime minister added. "If the Italian people do not soon see tangible success for their savings and reform efforts, there will be a protest against Europe, against Germany -- seen as the driver of EU intolerance -- and against the ECB (European Central Bank)." Later, at the news conference, Monti said that Italy was not looking for "recognition" and that "Italians had realised better than I thought they would why the government has taken the measures it has." Monti has pushed through a crushing austerity plan to fix the nation's problems but there is still concern over the impact on an economy that is moving into recession. However, just before arriving in Berlin, Monti got a boost from data showing Italy's public deficit had fallen to its lowest level since the fourth quarter of 2008. The deficit fell to 2.7 percent in the third quarter from 3.5 percent 12 months earlier, the Istat data agency said. Under pressure from the European Union and the markets, Italy is aiming to achieve a balanced budget by 2013. The talks capped a three-day flurry of diplomatic efforts in Berlin to stem the crisis. Merkel met French President Nicolas Sarkozy on Monday and IMF managing director Christine Lagarde on Tuesday. After the departure of former premier Silvio Berlusconi, further efforts have been made to include Italy in eurozone talks. After a trilateral meeting in the eastern French city of Strasbourg last November, the trio will meet again in Rome on January 20 ahead of an EU summit in Brussels 10 days later.