Wednesday

16th Jan 2019

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"I no longer represent my personal ideas, which are in the book, but the ideas of the government to which I belong," he said.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

Over €6bn of EU taxpayers' money was stolen by criminals in recent years and over €130m is still being lost each year, EU auditors said.

ECB takes over ailing Italian bank

Decades of mismanagement appear to have caught up with Italy's Carige bank as the European Central Bank takes control in a move to stave off another banking crisis.

News in Brief

  1. Stimulus still needed, ECB's Draghi says in final report
  2. May's Brexit deal defeated by 230 votes
  3. German economy hit by global economic turbulence
  4. MEPs narrowly call for end to 'tampon tax'
  5. MEPs back spending €6bn on fusion energy research
  6. MEPs call for 'awareness campaign' on autonomous car benefits
  7. German glyphosate report 'copy-pasted' from industry
  8. Commission set to reveal controversial common tax plan

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. On Morocco, will the EU ignore its own court?
  2. UK parliament rejects May's Brexit deal in historic defeat
  3. EU suggests majority vote on digital tax by 2025
  4. MEPs redouble appeal on sexual harassment
  5. Trump's wall vs Europe's sea
  6. Centre-right MEPs want transparency vote to be secret
  7. Germany scorns 'unusual' US threat on Russia pipeline
  8. UK parliament vote expected to prompt Brexit delay

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  2. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  3. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  4. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  5. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  6. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  7. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  8. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  9. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  10. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  11. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  12. Mission of China to the EUChina: Work Together for a Better Globalisation

Join EUobserver

Support quality EU news

Join us