Pier Luigi Bersani, the center-left candidate in next year's Italian elections, told CNBC in an interview that he was aware of the severity of the crisis his country faces, while vowing to stick to reforms begun under Prime Minister Mario Monti.
Monti's announcement he will resign before the end of 2012 has spooked investors, who had put their faith in him in a belief he would honor the country's debt and deficit reduction commitments.
Concerned that Italy's momentum toward reform could stall, markets have now pushed the country's borrowing costs up sharply since the news emerged over the weekend.
Yet in an attempt to reassure investors, Bersani lashed out against Silvio Berlusconi, who will also run for prime minister early next year. The flamboyant former leader said on Tuesday he was not concerned about the widening spread between German and Italian bonds, while accusing Monti of being "German centric".
"Frankly, I think they're rubbish," Bersani said of Berlusconi's comments. "I think that the [bond yield] spread is worrying, and that we have to have talks with Germany as friends and equals, in a friendly way."
Echoing a view expressed more than once by French President Francois Hollande, Bersani said he wanted European policies to focus more on growth, and not just austerity. In return for aid, Germany and other northern European countries have insisted on tough belt tightening in debt-stricken countries.
Still, some fear that the emphasis on savings and cutbacks is stifling growth.
"We will surely comply with our commitments to Europe," Bersani said, "but we will try, together with the other progressive parties, to improve European policy because we're not convinced that austerity alone is enough."
He supports the austerity measures that have been pushed through in Italy, saying they are necessary. However, Bersani also favors growth measures to kick-start the economy.
"These measures are necessary but they must be coupled with other policies that better favor growth," Bersani said.
The debt stricken euro zone is on a fast track toward recession, the center-left standard bearer told CNBC. That bodes for constructive policy changes.
"Europe needs to provide margins of investment to boost jobs and cushion the effects of the recession," Bersani said. "Something to that effect can be done and must be done also in Italy, because if we don't fight the recession, we will not be able to balance our public finances."
To lower borrowing costs for those most in need, Bersani said he supported the idea of common euro zone bonds.
"At European level there can be systems that allow management in common of part of public debt,and by using those we could obtain lower borrowing costs," he said. Bersani added that euro zone countries could launch bonds financed at European level to invest in technology, infrastructure and other strategic areas.
"I believe Europe could use a number of different means to become once again an engine of growth and not a major problem for the rest of the world," he added
Reporting by Carolin Roth, Writing by Antonia van de Velde