Maltese fear euro will push up prices

Most of the Maltese think the changeover from the lira to the euro will lead to price abuse and inflation, according to an EU survey.

Conducted last month, the survey shows that 79 per cent of Maltese respondents fear an abuse in prices and 61 per cent believe that the introduction of the euro will pump up inflation.

The government has not yet made a formal decision on when to introduce the single currency but the target date it has given to the European Commission is January 1, 2008.

The timing will depend on a recommendation by the EU about whether the island is prepared legally and economically to join the eurozone. That evaluation is expected in April 2007.

Given that 2008 is election year, however, the government may also have to take the people's negative perception of the changeover into consideration when making its final decision.

Economic and Monetary Affairs Commissioner Joachim Almunia admitted that the people's perception is that the euro increases prices.

"Even if statistically this is proven to be incorrect, perception is what matters and the perception is that the euro is inflationary. That is why we need to start implementing as soon as possible the information campaigns in countries aiming to adopt the euro in 2007 and 2008," he said.

The survey, conducted across the 10 new member states by EOS Gallup Europe network, shows that interest in the introduction of the euro in Malta increased by one percentage point during the past year to reach 62 per cent.

However, 48 per cent of the respondents felt unhappy that the euro would be replacing the lira. Only 40 per cent said they were satisfied with the move.

Asked when would they like the euro to be introduced without specifying dates, 40 per cent said that they would prefer this done as late as possible. Only 14 per cent think it should be adopted as soon as possible and 33 per cent said they would prefer to start using the euro "after a certain time".

The general perception of the euro across new member states has deteriorated from last year.

The most "euro-positive" countries seem to be Slovenia and Hungary and those with the most consistently negative perception are Lithuania, Cyprus and Slovakia.

On the other hand, a broad consensus exists on the positive practical consequences of the euro.