EU leaders meet to reaffirm European ideal after Brexit result

The three leaders of the EU’s largest countries by population maintained that the Britain's decision to leave the trading block did not mean the end of Europe.

Germany's chancellor Angela Merkel, France’s president Francois Hollande and Italy's prime minister Matteo Renzi met at a military airport in Naples in a symbolic gesture to strengthen the EU’s resolve after the UK leaves.

“We think that Europe is not the problem. It’s more the solution … Many thought the EU was finished after Brexit but that is not the case,” said Italy’s prime minister Matteo Renzi on Monday.

From the military airport they visited the island of Ventotene where they paid their respects to to the grave of Altiero Spinelli. Spinelli, considered to be one of the founding fathers of the EU, was imprisoned on the island with Ernesto Rossi during the second world war by Italy’s fascist dictator Benito Mussolini and wrote the 1941 Ventotene Manifesto, which called for a federation of European countries to oppose the nationalist populist movements which led to the war.

The leaders pledged to boost economic growth, co-operate on EU security and improve prospects for the Europe’s youth.

“Faced with terrorism and the civil war in Syria, we must do more for our internal and external security. Defence co-operation must be strengthened and the exchange of intelligence information must be intensified,” Merkel said.

Hollande added: “If there is one wish we have to share it is to say that Europe must assure its own defence, and France will take its part.”

Hollande did not refer to the Brexit result explicitly but suggested that something needed to be done to counter the growing economic uncertainty in the continent.

“It’s true that there was a slowdown of growth in the second quarter, and we must quash, as much as possible, all of the uncertainties and give an additional spur [to economic growth],” he said.

The meeting of the trio comes before an informal summit in Bratislava in September with the 27 members of the trading bloc, minus the UK, where there will also be discussions on the future of the EU and the ongoing migrant crisis.

Germany has said it wants a better Europe, while more Europe and closer integration was touted but its southern colleagues.

There are further tests ahead with growing euroscepticism and populist movements across the continent. Similar referendums to the UK’s could take place in the Netherlands and Germany and France face tight elections in 2017. Italy is facing a referendum on constitutional reform later this year.

Holger Schmieding, chief economist at Berenberg Bank, said: “The Italian referendum, likely be held in November, poses a key risk to the political and economic outlook for later this year, almost on par with the US political risk. Opinion polls suggest that the result of the Italian referendum is too close to call.

“The leaders will compare notes on EU reform ideas. Renzi may push more ambitious ideas than Merkel, who prefers modest changes … We do not look for any formal loosening of the fiscal rules at the end of the EU reform discussions. Nonetheless, last month’s decision to not impose fines on Spain and Portugal for their 2015 fiscal overshoots exemplifies the flexibility of the rules. Within limits, countries will be allowed a little more fiscal leeway. We expect that to hold especially for Italy, which has implemented serious structural reforms under Renzi.”

The trio committed to prolong the €315bn EU investment plan to 2019, and reportedly an enlargement of the plan was also discussed but with no agreements to the size of the increase.

Renzi is trying to encourage investment spending against a deficit reduction requirement under rules from the Eurozone to stimulate the wilting Italian economy. He said flexibility was allowed from the rule book and that the country’s budget deficit was at its lowest in 10 years.