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Ifo chief Clemens Fuest said that he believes Italians will reject the Euro currency and return to the Lira.

He told Germany's daily newspaper Tagesspiegel: "The standard of living in Italy is at the same level as in 2000. If that does not change, the Italians will at some stage say: 'We don't want this euro zone any more',"

He also said that if Germany's parliament were to approve a European rescue programme for Italy, it would impose on German taxpayers risks "the size of which it does not know and cannot control."

He said German lawmakers should not agree to do this.