Italy told lire cannot ever pull out of euro
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.CONFIRMING THE suspicions of Eurosceptics that life inside the single currency could be like being stuck in a burning house with no fire escape, Brussels insisted yesterday that Italy cannot legally pull out of the euro.
A day after the incoming European Commission President, Romano Prodi, sent the euro into a nose dive with comments which appeared to suggest the contrary, the Commission said there was a legal obligation on the lire to stay inside the euro.
Despite a hasty clarification, Mr Prodi's intervention on Monday raised questions over the long-term ability of the lire to stay in the euro zone, given the Italian economy's inflation record.
But Patrick Child, spokes-man for the acting European monetary affairs commissioner Yves-Thibault de Silguy, said the EU treaty was "clear on the irreversible character of participation in monetary union".
With markets jittery over the strength of the fledgling currency, the episode highlighted the difficulties in preventing damage to the euro from politicians' off-the-cuff statements.
It also raised questions about Mr Prodi's media savvy, and his ability to cut his ties with Italian politics. As one EU diplomat put it yesterday: "Prodi needs to decide whether he wants to be an Italian politician or the President of the Commission."
The original intervention came in a speech from Bologna in which Mr Prodi was quoted as saying: "Italy had very low inflation in 1998, but above that of our European partners. If we continue to have costs which diverge from other European countries it will be more difficult to remain in the euro."
He added: "If Italy continues to lose a percentage point of competitiveness per year, as is happening, and if the trend continues in the long term, it will be a tragedy for us. It could be difficult to remain within the euro." His corrected statement came swiftly, arguing there was no danger of the lire leaving the euro but not denying the risks of inflation rates diverging over the long term.
The euro, which has fallen by around 10 per cent since its 1 January launch fell sharply against sterling to 64.93p compared with 65.21p previously after Prodi's comments.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments