When the Italian central bank’s deputy governor joined a radio phone-in show last week, many callers asked why Italy didn’t ditch the euro and return to its old lira currency.
A few years ago such a scenario, that Salvatore Rossi said would lead to “catastrophe and disaster”, would not have been up for public discussion.
Now, with the possibility of an election by June, politicians of all stripes are tapping into growing hostility towards the euro. Many Italians hold the single currency responsible for economic decline since its launch in 1999.
“We lived much better before the euro,” says Luca Fioravanti, a 32-year-old real estate surveyor from Rome. “Prices have gone up but our salaries have stayed the same, we need to get out and go back to our own sovereign currency.”
The central bank is concerned about the rise in anti-euro sentiment, and a Bank of Italy source told Reuters Rossi’s appearance is part of a plan to reach out to ordinary Italians.
Few Italians want to leave the European Union, as Britain chose to do in its referendum last year. Italy was a founding EU member in 1957 and Italians think it has helped maintain peace and stability in Europe.
And the ruling Democratic Party (PD) is pro-euro and wants more European integration though it complains that the fiscal rules governing the euro are too rigid.
The PD is due to govern until early 2018, unless elections are called sooner. The PD’s prospects of victory have waned since its leader Matteo Renzi resigned as premier in December after losing a referendum on constitutional reform, and polls suggest that under the current electoral system no party or coalition is likely to win a majority.
Italians used to be among the euro’s biggest supporters but a Eurobarometer survey published in December by the European Commission showed only 41 percent said the euro was “a good thing”, while 47 percent called it “a bad thing.”
In the Eurobarometer published in April 2002, a few months after the introduction of euro notes and coins, Italy was the second most pro-euro nation after Luxembourg, with 79 percent expressing a positive opinion.
Italy is the only country in the euro zone where per capita output has actually fallen since it joined the euro, according to Eurostat data. Its economy is still 7 percent smaller than it was before the 2008 financial crisis, and youth unemployment stands at 40 percent.
CENTRAL BANK WARNING
Economists in favor of leaving say a devalued currency would revive Italy’s exports and that by throwing off the shackles of the EU’s fiscal rules the country could ramp up public spending to boost growth and create jobs.
Those wanting to stay in the euro say an exit would trigger a surge in interest rates and inflation, capital flight, a banking crisis and possibly a default on Italy’s public debt.
The central bank warns Italians that leaving the euro would sharply erode the value of their savings.
However, after repeated banking crises it is widely blamed for not preventing, and years of over-optimistic economic forecasts, the Bank of Italy no longer commands the respect among Italians that it used to.