A CHAIN of Tuscan supermarkets is enjoying a surge in business after pledging to accept the Italian lira alongside the euro, cashing in on the growing popular resentment over the single currency. Italian newspapers show beaming shop assistants holding up posters declaring, “Welcome back lira”.

This may be a retailer’s publicity stunt, but the fear of European authorities is that the supermarket could prove to be a sign of things to come.

A “perfect storm” of recession, political turmoil in Europe, deep resentment of the euro, and a political campaign to ditch it is leading some to ask the unthinkable: could Italy become the first country to abandon the single currency? The subject of ditching the euro, once a taboo, is to become the focus of a big political campaign after the Northern League, a right-wing member of the government coalition, declared that it would fight next year’s election on a platform of bringing back the lira.

That will make Italy the first eurozone country where a promise to ditch the single currency has become the subject of an election, and it is a campaign that just might resonate.

Even before the euro was launched three years ago Italy was seen as its soft underbelly, and things have only got worse. Italy has plunged into recession. Two days ago Brussels threatened the country with huge fines for breaking the euro’s borrowing rules. Italians blame the single currency for rising prices, and polls show that more than a quarter would like to ditch it.

Alasdair Murray, of the Centre for European Reform, said: “There are in most countries some anti-euro forces, but Italy is the first country where a party in government is making a song and dance about it. It is perfectly feasible there will be a country where a government comes to power promising to pull out of the euro.”

Roberto Castelli, the Northern League Justice Minister, announced that his party would present concrete proposals next week for ditching the euro. “Does sterling have no economic foundation because it is outside the euro? Is Denmark living in absolute poverty because it is outside the euro? Are Swedes poor because they are outside the euro?” he asked.

The Northern League hopes to tap into a broad base of frustration with the euro, now popularly blamed for soaring inflation and Italy’s economic problems. Polls show that two thirds of Italians still have problems with the euro, and one poll showed that 27 per cent wanted to return to the lira.

The emergence of Europe’s first mainstream anti-euro campaign marks the culmination of the currency’s worst week. After the French and Dutch rejections of the European constitution cast doubt on the entire European project, the euro’s value dropped to an eight-month low. The financial markets speculated over its future, with long-term interest rates on government debt starting to diverge in different eurozone countries. One British stockbroker predicted that it would collapse within a few years.

Italy, with inflation built into its economy and a highly uncompetitive industry, has found it impossible to keep up with Germany, and the one-size-fits-all interest rates and exchange rates that go with the euro. In recent years its competitiveness has dropped 25 per cent. Previously it kept up by devaluing its currency, but that is no longer possible.

Italy is not alone in facing economic difficulties: much of the eurozone is struggling. A report last week by the Centre for European Policy Studies, The Demise of the Euro, gave warning that Italy would be the first country to “stress” the euro, and that “the list of countries at risk is increasing, and could soon become the majority”.

The latest figures show that five of the twelve European economies (Germany, France, Italy, Portugal and Greece) are breaking even the newly watered-down government borrowing rules that underpin the euro. Portugal, Greece and Italy have all been caught fiddling their official figures to try to comply with the rules. The European Commission has started disciplinary proceedings against Italy in an attempt to make the country obey the rules.

It may struggle to enforce them, which are increasingly held in contempt.

The turmoil has come as a shock to the authorities responsible for the euro, who insist that it will be short-lived. But to its critics the turmoil is neither a surprise nor temporary. They gave warning that a single currency could not be upheld in the absence of a single government; every previous case of a currency union without political union in Europe has collapsed. They also said that building a big project such as the euro on shallow public support risked a future revolt.

Roger Bootle, the founder of Capital Economics, and a leading Eurosceptic voice in the City of London, said: “The people who concocted it wanted monetary union in order to lead to political union, but they put the cart before the horse. The problems are a direct consequence of the way it is put together.”

DEAD CURRENCY

Virginia Tobacco used as currency for nearly 200 years from 1619

Times Recommends

• Thousands of Tamils dying in 'welfare camp'
• Jackson 'rebuilt his nose before he died'
• Renewed Iran protests crushed by militia