PRODI SAYS ITALY'S PUBLIC SECTOR DEFICIT COULD JEOPARDISE EMU MEMBERSHIP.

Italy will have to make some "radical choices" if it wishes to continue to be part of the Single Currency (Euro), commented Romano Prodi, former Prime Minister of Italy, and now the future President of the European Commission. "The Euro is a major opportunity, but without radical choices it can quickly become a burden", he added. He called upon Italy to be even more stringent than the other European Union countries of the Euro zone. Bond markets in Europe edged downwards in the wake of Mr Prodi's statement, although he immediately issued a statement saying he had been misquoted. The statements coincided with massive selling of the Japanese yen on world currency markets and purchases of US dollars by the Japanese Central bank. For its part, the European Central Bank (ECB) helped the Japanese authorities to keep down the value of the yen by massively selling the Japanese currency also.

In answer to questions related to Commission President-designate Romano Prodi's comments on Monday about Italy's position as Economic and Monetary Union member, spokesman Patrick Child said that "the (EU) Treaty is clear on the irrevocable character of participation in Monetary Union". He also said that Italy's inflation rate was not in itself a major worrying factor and countries like Ireland, Portugal and Spain also had inflation rates above the euro zone average.

Romano Prodi said that although Italy had curbed inflation at a mere 2% annually, he added that the other member countries of the Euro zone had even lower inflation rates, most recording annual rates of 1%. If Italy's inflation rate continues to diverge from that of the other member countries of the Euro zone "we would be unable to remain inside the Euro zone". In answer to questions...