Senior figures in Prime Minister Berlusconi's government have set their sights on changing the EU Growth and Stability Pact, as recent data and analysis throw doubt on the country achieving its targeted growth rate for 2002

This may well be the week of Ferragosto, the traditional mid-summer Italian national holiday, but there are signs that an autumn storm is gathering. Nor is the storm in question related to the unseasonal August downpours that have done up to €350 million worth of damages to Italian agriculture; rather it concerns speculation that, come next month, Italy may push for a review of the European Union's Growth and Stability Pact.

The starting point of the latest bout of speculation regarding Italian attitudes to the stability pact came last week when national statistics agency ISTAT revealed that Italian GDP had grown by only 0.2 per cent in the second quarter of the year. The centre-right government of Mr Silvio Berlusconi had been predicting 1.3 per cent growth in 2002 but, following these latest figures, most independent analysts now believe that the Italian economy will grow by only 0.9-1.0 per cent at best.

ISTAT completed its less-than-rosy review of the euro zone's third-largest economy by reporting that industrial production had fallen by 5.4 per cent in June. The Bank of Italy did little to brighten the picture when it claimed, also last week, that not only had tax revenue declined by 0.4 per cent in the first half of the year but also that Italy's public debt had increased by 3.5 per cent in the last year to a record level of €1,386 billion.

Inevitably the figures prompted immediate and bitter criticism from the centre-left opposition, which argued that the government was no longer in a position to deliver promised tax cuts as well as promised investments in education, public works and the depressed south.

More significant, perhaps, was the response of Mr Rocco Buttiglione, Minister for European Affairs, who two days after the publication of the ISTAT figures appeared to call for a renegotiation of the stability pact when telling the Dow Jones Newswires: "The stability pact has played a fundamental role in cracking down on spendthrift policies in Italy and in other European countries. We now want to improve it."

Even if Mr Buttiglione was circumspect in his choice of words, his suggestion that the pact might be softened nonetheless prompted an immediate "hands off" rebuke from European Commission President Mr Romano Prodi. Undaunted, however, senior centre-right figures have returned to the fray this week, apparently setting their sights on the stability pact.

Minister for Relations with Parliament, Mr Carlo Giovanardi, suggested that "European policies are decided by central governments", adding: "Prodi is wrong. After what happened on September 11th, there are no untouchable totem poles in economic policy."

Mr Giovanardi furthermore claimed that the Italian government would give serious consideration to a possible revision of the pact at a forthcoming cabinet meeting on August 30th. The Federalist Northern League, a government coalition partner, also got in on the act with its economics spokesperson, Mr Giancarlo Giorgetti, saying that "the stability pact can now be considered redundant".

Deputy Foreign Trade Minister Mr Adolfo Urso struck the same keynotes when saying this week that from now on "the pact has to be interpreted within the ambit of the overall priority of stimulating \ growth".

Rounding off the growing anti-pact clamour came a front page story in Wednesday's Rome daily, Il Messaggero, which claimed that Economy Minister Mr Giulio Tremonti would await the outcome of the German general election in September before trying to form a tripartite Rome-Bonn-London axis to call for a review of the pact.

Any such move is expected to be welcomed, in private at least, by the Irish authorities. Although the official line remains that the Republic's finances will end the year in surplus, a growing number of independent observers - including the IMF - believe that the State will test the limit of the pact either this year or next year.

Prime Minister Berlusconi and Mr Tremonti have both been categoric in their denials of such speculation, regularly re-affirming Italy's commitment to the stability pact throughout recent months.

Yet the suspicion remains that there may indeed be some fire lurking behind the smokescreen of mid-summer invective and speculation, especially with regard to an Italian call not for a revision of the 3 per cent deficit/GDP criterion (Italy will probably return a 2.2 per cent figure this year) but rather for an extension of the 2004 deadline on balancing budgets (something that may also be viewed favourably by France).

The theory that the Italian government wants to await the outcome of the German election before pushing hard against the pact is not without logic. Some commentators believe that if Christian Democrat Mr Edmund Stoiber, rather than Social Democrat Mr Gerhard Schröder, were to win, then Rome might find a ready ally in pushing for revision.

Inevitably, too, the Italian government knows only too well that such a call would carry much more weight if led by Germany rather than Italy.

Lest there be any doubt on that subject, it was spelt out loud and clear this week by Mr Tommaso Padoa-Schiopa, Italy's representative on the board of the European Central Bank.

Whilst complimenting countries such as the Republic for the way in which they had balanced their budgets, notwithstanding "historically huge public finance problems", Mr Padoa-Schiopa went on to tell Milan daily Corriere Della Sera: "It is rather surprising to find that in the week of Ferragosto, the country which appears to be making most noise about this issue [review of stability pact\] is Italy, the country that is normally most on holiday at this time of year I would also add that Italy is the last country that should start promoting a deviation from the pact, given its recent history and its huge public debt

"Mind you, I am very glad to note that the Italian government has not come up with any of these proposals."

Not for the time being, anyway.