Italian PM warns that we need an EU for 28 countries - not just one

He also says that austerity policies are pushing voters towards populist parties across the continent

Angela Merkel, Matteo Renzi, eu austerity, business

Axel Schmidt / AP

In the wake of the inconclusive Spanish election results over the weekend, Italy’s Prime Minister, Matteo Renzi has warned that German-driven eurozone austerity policies are generating support for populist parties across Europe and leading to electoral setbacks for incumbent governments and broader political paralysis.

Speaking to The Financial Times this morning, the 40-year old former-Mayor of Florence, and who has reduced Italy’s budget deficit since he took power early last year, said that he has huge esteem for Angela Merkel, "but that we have to be frank – Europe has to serve all 28 countries, not just one."

"Those who have been in the front line of being the faithful allies of the politics of rigour without growth have lost their jobs," Mr Renzi said commenting on the Spain's election results and the fall of centre parties who oversaw austerity programmes in Portugal and Greece.

His intervention comes as the markets across Europe fell by an average of 1.5% following the Spanish elections, which failed to produce a majority government and saw the left-wing party Podemos win 20% of the vote.

Spanish banks shares fell sharply: Caixabank was down 7.5% and the Santander fell by 5%.

Meanwhile, the price of Brent Crude clawed back about 50c per barrel on Asian markets overnight having touched 11-year lows of just over $36 yesterday.