Monday

15th Oct 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"I no longer represent my personal ideas, which are in the book, but the ideas of the government to which I belong," he said.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.

EU warns Italian populists on Greek-type crisis

The EU commission president urged Rome to rethink its budget plans to avoid a Greek-style euro crisis. Meanwhile, Italy's finance minister tried to calm his colleagues in Luxembourg.

News in Brief

  1. Le Pen warms towards cooperation with Bannon
  2. Bettel set to stay in power in Luxembourg after election
  3. EU-UK Brexit deal talks paused
  4. Macedonian parliament to vote on name change Monday
  5. Swedish opposition leader gives up on forming government
  6. Commission confirms: no record of Juncker speech seminar
  7. Ukraine splits from Russian orthodox church
  8. Polish doctor wins landmark pro-life case in Norway

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  4. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  6. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Latest News

  1. Daily reality in Western Sahara - and how EU can protect it
  2. Bavarian election puts Merkel on defensive
  3. It's time for the EU to stand up to transnational corporations
  4. Tug of war between 'top-down' and 'bottom-up' cohesion money
  5. 'Macron vs Orban' is no quick fix for EU democracy
  6. Brexit and sanctions at EU summit This WEEK
  7. EU looks at Morocco and Tunisia to offload migrants
  8. EU urged to seize assets of foreign hackers

Stakeholders' Highlights

  1. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Mission of China to the EUChina: Work Together for a Better Globalisation
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Join EUobserver

Support quality EU news

Join us