Italian minister suggests return of the lira

Italian minister suggests return of the lira

Italy’s welfare minister, Roberto Maroni, has called for a referendum aimed at bringing back the lira. His comments do not reflect government policy.

However, they do highlight the problems the European Union will have to deal with after this week’s rejection of the EU constitution by France and the Netherlands.

Mr. Maroni’s call is not for an abandonment of the euro but for dual circulation of the euro and the lira. He points to the example of Britain as a justification of his idea.

He blamed Italy’s weak economy on the euro and those who support it, as does Italy’s prime minister, who lays the blame for Italy’s current recession on the euro’s high exchange rate in relation to the dollar.

Economists, however, say that abandoning the euro would only damage the Italian economy further, sending interest payments on its national debt so high that they would wipe out any advantage conveyed by a competitive devaluation.

As Mr. Maroni’s comments were made public Friday, new economic data showed that Italy’s service sector had declined in May even as the sector rose in the eurozone as a whole.

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