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Banks

Europe vote will decide if Italy stays in EU: League lawmaker

MILAN (Reuters) - Italy should leave the European Union unless there is a decisive shift toward populist parties in European Parliament elections in May, according to a prominent member of the far-right League party, part of the country’s two-party ruling coalition.

Italian government bond yields jumped on Claudio Borghi’s comments, which revived concerns about Rome’s commitment to the euro common currency, but later settled back.

League leader Matteo Salvini and a leading lawmaker from his coalition partner, the 5-Star Movement, denied there were any plans to leave the EU.

“Either we succeed in changing (Europe) now, or we will have to leave,” Borghi, chairman of the lower house budget committee and the League’s economics spokesman, said, referring to the European election.

“I think this is the last opportunity,” Borghi said at a conference on Europe in Milan, calling the European project “disastrous and toxic”.

Responding to the comments, party leader Salvini said: “We have no intention to exit Europe. We want to change it, improve it, but not abandon it.”

Salvini has regularly denounced EU officials in Brussels as unelected bureaucrats and blames them for Italy’s economic and public finance difficulties.

Salvini is allied with far-right groups in other EU countries and is working with U.S. President Donald Trump’s former political strategist Steve Bannon to build a network of parties opposed to closer European integration.

“INVESTOR CONFIDENCE”

Francesco D’Uva, head of the 5-Star faction in the lower house of parliament, cautioned against making claims that could upset financial markets.

“We have no intention to exit the EU, and for this reason it would be best to avoid making statements that put at risk investor confidence,” D’Uva said in a statement.

The League has doubled its support since a national election about a year ago, opinion polls suggest, while the 5-Star has lost ground, turning the European Parliament elections into a crucial test for the balance of power within the government.

Borghi, an economist, has repeatedly said that Italy would be better off with its own currency, adding however that dumping the euro is not in the government’s program because of 5-Star opposition.

On Friday, Borghi also reiterated his call for the European Central Bank to become a lender of last resort. “In this way no spread (between the interest rates on Italian and German bonds)would exist anymore,” he said.

Citing the latest polls, Borghi said the League should emerge as the biggest single party in the new European Parliament.

Reporting by Elvira Pollina; Writing by Steve Scherer and Giselda Vagnoni; Editing by Gareth Jones

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