Breakingviews - Anti-euro debate rears its head in Italy

The Italian flag waves in front of The "Altare della Patria" also known as "Vittoriano" downtown Rome, Italy, March 23, 2016. REUTES/ Stefano Rellandini

MILAN (Reuters Breakingviews) - Opponents of the euro are rearing their heads again, this time in Italy. Matteo Salvini, leader of the country’s anti-immigration Northern League party, has reiterated his opposition to the single currency. Growing Italian discontent with the European Union could help to make the issue a vote-winner in elections planned for March 4. Despite a widespread economic revival, monetary union remains a political target.

Investors thought they had put the threat of a euro breakup to bed after opponents of the currency bloc were trounced in French, Dutch and German elections last year. But they are springing up elsewhere. Salvini, who has an outside chance of becoming Italy’s next prime minister, this week told newspaper La Repubblica he remained convinced that the euro was a mistake and vowed to rectify the error. In his manifesto, Salvini pledges to renegotiate EU treaties in order to regain political and monetary sovereignty. He has also spoken of introducing a parallel currency.

The tactic is probably designed to steal votes from the 5-Star Movement, currently projected to become Italy’s largest single party with 28 percent of votes. The anti-establishment group had previously promised a referendum on leaving the single currency. But in a bid to appease moderate voters, leader Luigi Di Maio last year declared the plan would be a last resort. Relative political calm and resurgent growth in the euro zone’s third-largest economy helped propel Milan’s FTSE MIB Index to a two-year high in November, making it among Europe’s best-performing indexes.

Yet bashing Brussels could yield political gains in the boot-shaped country. Once staunchly pro-EU Italians have become more sceptical about the union. According to a Eurobarometer poll published in November only 34 percent of Italian respondents said they tended to trust the EU, the lowest level in the bloc outside Greece, Britain and France.

Anti-euro rhetoric can backfire, though. Marine Le Pen’s vague plan to pull out of the single currency cost her votes in last year’s French presidential election. If the threat of a return to the lira becomes too real, savers could get cold feet. Even so, Italy’s election is shaping up to be another political test for the euro.


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