Italian presidential candidate Silvio Berlusconi has said that some countries may be forced to leave the euro if the European Central Bank (ECB) does not become a lender of last resort.

"The euro is a weak currency because it does not have a central bank to support it," Berlusconi told daily Corriere della Sera.

"If it continues to not have a bank to guarantee government bonds and is not prepared to print money, some countries may be forced to return to their national currency," he said.

It is not the first time that the former Italian Prime Minister made these type of statements although he tends to tone them down or partially rectify them.

Analysts agree that this upcoming weekend's elections could suppose a significant risk event, something that Morgan Stanley described as a 'political cliff'.

The consensus does not expect Berlusconi to pull off a victory and instead expects a coalition of pro-European parties that will continue the course of austerity and reforms. However, some analysts such as those at Morgan Stanley warn that a broad coalition looks quite heterogeneous and somewhat unstable.

"The next political leaders are likely to maintain sound fiscal policies, with Italy's primary budget surplus expected to rise further. But whether the pace of economic reform will accelerate meaningfully remains to be seen," said Morgan Stanley.

JM

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