Italian minister rubbishes euro 'disaster'

THE future of the euro was under scrutiny again today after an Italian minister said the country should consider quitting the single currency and reintroducing the lira. Welfare minister Roberto Maroni, a member of the eurosceptic Northern League party, told La Repubblica newspaper that Italy should hold a referendum to decide whether to return to the lira.

He said European Central Bank president Jean-Claude Trichet was among those chiefly responsible for the 'disaster of the euro'. And he hailed Britain as a country whose economy 'grows and develops, maintaining control over its currency'.

The comments follow a report in Germany's Stern magazine that top German officials, including finance minister Hans Eichel and Bundesbank president Axel Weber, had secretly discussed dumping the single currency. It also comes days after France and the Netherlands emphatically rejected the EU constitution.

The euro dived three-quarters of a cent to a low of $1.2233 today on Maroni's remarks before clawing back most of the lost ground once his political allegiances became clear.

'The Northern League are nutters,' said Julian Jessop, chief international economist at Capital Economics. 'They want to separate from Italy, let alone the eurozone. Without the low interest rates the single currency has delivered, Italy would be bankrupt. Frankly, this idea is a complete non-starter.'

Nevertheless, the euro's knee-jerk sell-off reflects growing nervousness about the crisis engulfing the EU. 'Europe is gripped with uncertainty,' said Mark Wall, European economist at Deutsche Bank, adding that the chances of the euro breaking down were 'still incredibly small'.

Lorenzo Codogno, European economist at Bank of America, said: 'There is clearly a possibility of additional outbursts by other politicians trying to gain politically from the current anti-Europe wave. 'The danger is of a move towards more populist policies, which would push Europe even further away from the supplyside reforms that are desperately needed to stimulate growth.'

The eurozone's sluggish growth was highlighted in figures today showing a 1.2% slump in retail sales in April, leaving them 0.9% lower than a year earlier.

A RIGHT-WING MAVERICK

IN any European country other than Italy, Roberto Maroni, 50, would be considered a political maverick without a chance of attaining high office, let alone a place in the Cabinet. But in the murky political waters of Italy, where a weakened Premier Silvio Berlusconi is forced to form alliances with anybody he can to build his coalition government, the likes of Maroni can thrive.

He is one of the highest fliers in the right-wing Northern League, which advocates separating the rich north from the poorer south. He last hit the headlines in October when he declared Italy had enough immigrant workers and suggested companies should be forced to hire Italian nationals.