Barack Obama praised the political "vision" of Italian Prime Minister Matteo Renzi in a newspaper interview on Tuesday ahead of a state visit by Renzi to Washington, and criticized EU rules that rein in national budgets.

 

"I believe the austerity measures have contributed to slowing growth in Europe," the U.S. president told la Repubblica daily, adding that Renzi understood the need for reforms to increase productivity and stimulate investments.

 

Obama's words are a boost for Renzi, who faces a referendum on constitutional reform that could decide his political future and whose 2017 budget targets a fiscal deficit higher than previously agreed with the European Union.

 

Obama said European policies aimed at capping budget deficits and lowering debt had led to years of stagnation and high unemployment in several countries.

 

"That is why I believe the vision and the ambitious reforms Prime Minister Renzi is following are so important," he said. Renzi "recognizes the need to make the investments necessary to sustain growth and jobs and increase opportunities."

 

Renzi's reforms in areas such as the labor market, the state bureaucracy and education have so far failed to boost Italy's chronically sluggish growth and his popularity has fallen over the last 18 months.

 

He has said he will resign if he loses a Dec. 4 referendum on his plan to overhaul the constitution by reducing the role of the Senate and cutting the powers of regional governments. A large majority of opinion polls over the past month have put the "no" camp ahead.

 

Former prime minister Mario Monti, whose austerity measures are widely credited with saving Italy from a debt crisis in 2011 and 2012, said on Tuesday he would vote "no".

 

He told Corriere della Sera daily the new role of the Senate was unclear and criticized Renzi for what he said was an irresponsible budget that undermined public finances by offering hand-outs to persuade people to support the referendum.

 

Brussels will issue a verdict this year on the budget. European Commission officials are concerned about Italy's inability to bring down a public debt of around 133 percent of national output, the highest in the euro zone after Greece's.

 

However, they are also reluctant to hurt Renzi ahead of the referendum which they fear could bring political instability if he loses and favor the rise of the eurosceptic 5-Star Movement.