German Chancellor Angela Merkel says she is encouraged by Italy's reform course, after a series of bilateral meetings with Italian Premier Matteo Renzi.
Merkel told a joint news conference Friday that labor market reforms adopted by Renzi's government marked "important progress on a psychological level."
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She noted that German entrepreneurs in Italy told her they now felt free to hire workers, and that "they are no longer afraid of the incalculable costs."
Recent labor market reforms limit court awards to only monetary compensation for employees wrongly fired for economic reasons, without the possibility of ordering that they be rehired.
Renzi said that Italy "can and must accelerate reforms. Woe to whoever thinks of slowing down," in the wake of the European Central Bank's plans to pump stimulus into the economy.