Italy is going in the right direction towards a more prosperous Europe, President of the European Council Herman Van Rompuy said on Monday.

"Today premier Monti described to me a new package of measures, starting from the liberalization of economy," which is "crucial to regain market confidence," Van Rompuy was quoted by the ANSA news agency as saying after meeting here with Italian Prime Minister Mario Monti.

Van Rompuy stressed the need to create more and better jobs, as "the economic slowdown is likely to increase the number of unemployed people in Europe that are already 23 million, mostly young."

Standard & Poor's recent downgrading of Italy along with eight other eurozone countries including France and Spain reflected a lack of action by the eurozone rather than by Italy, he said.

The prime minister noted the ratings agency had highlighted "the positivity of the action of Italy's government" and "the insufficiency of eurozone governance."

Van Rompuy said the European Stability Mechanism (ESM), a rescue funding program, will come into force in July 2012.