Italy calms Germany's fears for euro

Italian charm last week won over sceptical German politicians, boosting the City's assessment of the chances of European economic and monetary union (EMU) starting on 1 January 1999. Carlo Azeglio Ciampi, the Italian Finance Minister, toured Germany to calm fears that his country's debt problems could weaken the credibility of the euro.

The German parliament's economics committee, whose support will be crucial when Germans vote on the euro this May, gave Mr Ciampi a ringing endorsement. A statement said that Italy could converge "in and through the euro".

The Independent's panel of economists now believes the financial risk of ditching Italy is greater than the risk of keeping it on board. Mr Ciampi said Italy's national debt, running at 120 per cent of gross domestic product, will reduce to 100 per cent in the next few years. This allows it to match a loose version of the Maastricht criteria.

Both Nikko Europe and James Capel raised their odds on a punctual EMU. Only ABN Amro and Goldman Sachs think there is a 20 per cent chance it will not go ahead on time.