Tuesday

21st Aug 2018

Euro is 'indispensable', Italian populists say

  • Italian banks are among the most indebted in the EU, amid the populist election victory (Photo: Michelle Lee)

Italy's EU affairs minister has said the euro was "indispensable", reassuring markets amid uncertainty over Italy's new government.

"The euro not only has positive aspects but also has indispensable aspects. If you want a single market you have to have a single currency," Paolo Savona told press in Rome on Wednesday (13 June).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"There is no plan B. I have never asked to leave the euro. How many times do I have to repeat it? My position is clear," he added.

The 81-year old economist spoke at the launch of his autobiography, entitled Like a Nightmare and a Dream, which does say Italy should have a euro-exit plan.

But he said his musings as a private person were no longer relevant now that he had assumed public office.

"I no longer represent my personal ideas, which are in the book, but the ideas of the government to which I belong," he said.

His comments reassured markets amid concern that Italy's new rulers planned to blow apart eurozone fiscal rules by splurging on welfare and cutting taxes.

The populist parties that hoisted him into office, the 5 Star Movement (5MS) and League, had also spoken of a euro-exit in their draft coalition accord, before dropping the idea.

Italy sold €5.63bn of sovereign bonds on Wednesday, with the yield on two-year bonds dropping below one percent on Savona's comments, compared to 2.73 percent two weeks ago.

The yield on 10-year bonds and the spread with German bonds also fell, the Reuters news agency reported.

Savona had previously been tipped to be finance minister, but his formerly radical views prompted the Italian president to veto that appointment.

His comments also came amid a clash on migration, which saw French leader Emmanuel Macron call Italy's interior minister Matteo Salvini "nauseating" for his decision to turn away a migrant boat, and which saw Italy accuse Macron of "hypocrisy" in return.

But Savona praised Macron's ideas on eurozone reform, which included a joint deposit guarantee scheme and a new EU bailout fund, despite the war of words on migrants.

He warned Germany's financial masters not to be "entrenched in their philosophy" of debt discipline and austerity.

But he said Macron was "playing a very important role … if we find a meeting point, we will re-launch Europe at large", he said.

Savona added that the European Central Bank should be given more leeway to play with interest rates on the model of the US Federal Reserve.

He also said Italy should be free to spend extra money "to guarantee growth and social well-being", in order to "respect" 5MS and League voters, "otherwise there will be a difficult situation in the European elections of 2019".

Savona described himself as "technician" who will carry out the government's instructions.

He also likened himself to Galileo, whom he said had been similarly accused of radical ideas that he did not espouse, and to Odysseus, who managed to sail home despite siren calls for him to abandon course.

Speaking to Italian press the same day, Salvini said euro rules ought to be changed but that he trusted Savona's point of view.

"The euro is an experiment born badly, with many difficulties. We want to change the EU rules to make Italians better off … [but] I esteem Savona so highly that I trust him", Salvini said.

Christoph Rieger, a strategist at German lender Commerzbank, told Reuters that the good vibrations caused by Savona's comments would not last long, however.

"Perhaps they are recognising that they can get more out of the EU if they at least commit to certain key principles," Rieger said on Italy's new leaders.

"In the longer term they need to do something different to bring the deficit under control, not just pay lip service toward the euro," he added.

EUobserved

How radical is Italy's Savona really?

Italy is in a political crisis because president Sergio Mattarella has rejected Paolo Savona as a cabinet member, for his views on the EU.

Analysis

Greece exits bailouts, but difficult path ahead

"Greece's recovery is not an event, it is a process," EU commissioner Pierre Moscovici says. Statistics, and differences of views between the country's creditors, show that the process will not be easy.

EU gets record response on 'summertime' consultation

The EU Commission has received several million responses from citizens, businesses, and organisations on whether to end the daylight summertime savings. Any tangible change would take ... time.

News in Brief

  1. Italy allows boat with migrants to dock
  2. France's Total pulls out of Iran due to US sanctions
  3. Trump accuses EU and China of currency manipulation
  4. Swedish conservatives regret unsuccessful integration policies
  5. Record high measles cases hit Europe
  6. Swedish politician declares war on media
  7. Italy threatens to return migrants to Libya
  8. MEP accuses Maltese government of 'hate campaign'

Opinion

Has the time finally come for 'European champions'?

Since Emmanuel Macron took the French presidency in 2017, the concept of consolidating European industries to create continental 'champions', capable of competing on a global scale, has been revived.

EU 'tax lady' hits Google with record fine

Margrethe Vestager has fined the US tech giant with €4.34bn for abusing its market dominance in mobile operating systems - but assured US president Donald Trump that it is not because she does not like America.

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. UK sanctions appeal risks highlighting EU divisions
  2. Wind delays launch of European wind-mapping satellite
  3. Greece 'normal' again after end of crisis, EU says
  4. Putin strikes blow against Russia's isolation by Europe
  5. EU-China cooperation on CO2 storage lost in limbo
  6. Greece exits bailouts, but difficult path ahead
  7. EU gets record response on 'summertime' consultation
  8. 'Nativism' and the upcoming Swedish and Bavarian elections

Stakeholders' Highlights

  1. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  2. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  3. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  4. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  5. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  6. FIFAGreen Stadiums at the 2018 Fifa World Cup
  7. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  8. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  9. FIFARecycling at the FIFA World Cup in Russia
  10. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  11. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  12. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up

Join EUobserver

Support quality EU news

Join us