Silvio Berlusconi launched an astonishing attack on the euro yesterday when he blamed the Europe's single currency for Italy's economic woes in the starkest comments to date, saying it "screwed everybody". The Italian Prime Minister has frequently blamed the euro for pushing up prices and choking off exports. Yesterday the billionaire claimed that his main political foe, the former prime minister Romano Prodi, had brought Italy to the brink of disaster by negotiating bad terms for its entry into the single currency. He told a conference of his Forza Italia party: "Italy is not at a disastrous point, but I can say that Prodi's euro screwed us all," trying to score points against his opponent in the run up to the campaign for next year's general election. Mr Prodi, now the leader of the centre-left opposition which is leading in the opinion polls, was president of the European Commission until November. Mr Berlusconi's comments hit the euro, which is sensitive to on-going hostility from Italian government members, and it fell to a low of $1.2036, but later recovered thanks to a drop in German unemployment. The European Commission leapt to the euro's defence yesterday after the Italian premier's comments. "We think the euro has not caused those problems and is an extremely good thing for Europe," a spokesman for the Commission said, stressing: "The euro is here to stay and will stay. Hundreds of economic studies clearly demonstrate that the introduction of the euro has been clearly beneficial for the economy." The currency has come under a lot of pressure following the No votes in France and the Netherlands on the European constitution. Heated exchanges between Tony Blair and the French President, Jacques Chirac, about Britain's budget rebate and subsidies to French farmers under the Common Agricultural Policy exacerbated uncertainty about the future direction of the European Union. Mr Berlusconi had previously blamed the euro for Italy's recession, but always ruled out quitting the single currency. Last month he said it was "impossible" and not in Italy's interest to leave the euro - an idea put forward by the eurosceptic Northern League party, which is part of his centre-right ruling coalition. David Page, an analyst at Investec, said about Mr Berlusconi's comments yesterday: "It's an election thing. But more worrying, the euro has gone through a tough time, with the recent referendum rejections ... The comments are going to add to people's angst about the euro." In June, Italy's Labour minister, from the Northern League, called for a referendum on whether Italy should temporarily pull out of the euro and reintroduce the lira - an idea that European officials dismissed. A Northern League group is working on getting a referendum in conjunction with the general election, scheduled for spring. Mr Page said the chances of that happening were quite high, as only 500,000 signatories are needed for a petition to call a national referendum. "That would create a lot of uncertainty, which would hurt the euro," he said. Economists said Mr Berlusconi's comments were wrong, arguing that Italy's high labour costs - the highest in the EU - were mainly to blame for the country's economic malaise. Many Italians associate the euro with high prices - when it was introduced, many merchants simply dropped the zeros from the old prices in lira, which led to sharp price rises. But Mr Berlusconi needs to claw back lost ground from Mr Prodi's opposition party, which is ahead by about 5 per cent in the opinion polls. The billionaire media mogul, who owns several if Italy's main private television stations, suffered crushing defeats in regional elections in April.Berlusconi: Euro 'screwed everyone'
Thursday, 25 March 2010
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