Facing rumours that he could face pressure to quit, Italian Prime Minister Matteo Renzi hit back yesterday against criticism from business leaders and dared his opponents to challenge him in Parliament.

“If they think they have the numbers and the right candidate, let them try it,” the 39-year-old centre-left prime minister told the left-leaning La Repubblica daily.

Renzi came to office in February as Italy’s youngest-ever prime minister after forcing out his predecessor Enrico Letta, who was widely seen to have lost the confidence of the business establishment and key opinion formers over his government’s lack of progress.

Just seven months later, he too faces criticism over the slow pace of reforms, fanning speculation in political circles that he could be forced to step down in favour of a technocrat government led by central bank chief Ignazio Visco.

Although he won an emphatic victory in European parliamentary elections in May and remains by far the country’s most popular politician, he has come under mounting pressure as Italy faces recession, soaring unemployment and a towering debt. Demands are growing for swifter action to match his ambitious reform promises and calls for a more expansive and growth-friendly interpretation of European Union budget rules.

After days of attacks from establishment voices ranging from the Corriere della Sera newspaper to business leaders and Catholic bishops, Renzi came out fighting in his newspaper interview. He brushed aside any suggestion of an early end to the government, whose five-year term runs until February 2018. Today, at a meeting of his Democratic Party, he is expected to take on leftist critics angered by his plans to scrap some job protection guarantees as part of a drive to redraw labour market rules.

With the European Central Bank keeping interest rates low, Rome currently has no problem servicing its two trillion euro debt.

However, Italy is already tasting deflation, and even normally optimistic government forecasts are pointing towards the economy contracting this year.

If the trend continues, many economists and commentators fear that Italy risks ending up under the administration of the joint European and IMF “troika” that bailed out Greece at the price of years of harsh austerity.