ROME (Reuters) - Silvio Berlusconi said on Tuesday that Italy must not leave the euro but his main coalition partner immediately disagreed, underlining policy differences in the centre-right bloc which is expected to take most seats in an election in March.

FILE PHOTO: Italy's former Prime Minister Silvio Berlusconi gestures during the television talk show "Porta a Porta" (Door to Door) in Rome, Italy June 21, 2017. REUTERS/Remo Casilli/File Photo

Berlusconi said in a radio interview that leaving the single currency would hurt Italy’s economy and added that his main ally, the eurosceptic Northern League, now shared his view.

But the League’s economics spokesman Claudio Borghi shot back that if the centre-right won the March 4 election it would immediately prepare for Italy to exit the euro, which many Italians blame for years of economic underperformance.

The conservative alliance, which also includes the far-right Brothers of Italy party, is projected to win most seats at the election but to fall short of an absolute majority.

The anti-establishment 5-Star Movement, which is the most popular single party, has steadily rowed back on its previously eurosceptic stance and its leader said on Tuesday that leaving the single currency was no longer a party policy.

In an interview with Radio Capital, Berlusconi - whose Forza Italia (Go Italy!) party is the lynchpin of the centre-right coalition - said he spoke on behalf of League leader, Matteo Salvini, who has given mixed signals on the euro.

“Salvini is no longer of the idea that we should leave the euro,” Berlusconi said. “He has understood that it would be technically impossible and unsustainable for our economy.”

The League has softened its anti-euro rhetoric recently but 81-year-old Berlusconi, who has often in the past claimed to speak on behalf of others, may have been overstating the change of tone in an effort to reassure moderate voters.

Shortly afterwards Borghi gave a very different view of the League’s position in a television interview.

“One second after the League is in government it will begin all possible preparations to arrive at our monetary sovereignty. It’s a question of national security,” he said.

VAGUE PRIORITIES

Despite Borghi’s words, an exit from the euro did not feature among a list of vague policy priorities agreed by the centre-right parties at a meeting on Sunday.

Berlusconi has called for Italy to operate with two currencies, keeping the euro for international trade and tourism while printing its old lira currency for domestic use.

The prospect that eurosceptic parties could try to pull Italy out of the single currency worries financial markets, although euro exit is not a prominent theme in the election campaign.

As the Northern League has scaled back its anti-euro rhetoric, 5-Star has also watered down a previous commitment to hold a referendum on the euro as it seeks to reassure voters and investors that it can be trusted with power.

“I believe it is no longer the right moment for Italy to leave the euro,” Di Maio said in an interview on Tuesday with state television company RAI. “The referendum is a last resort which I hope to avoid,” he added.

Di Maio has previously said that 5-Star will only pursue a referendum on the euro if it is unable to win any concessions from its partners to soften euro zone fiscal rules.

The 31-year-old party leader confirmed on Tuesday that 5-Star would raise the budget deficit above the EU’s limit of 3 percent of gross domestic product in order to increase public investment in infrastructure.

He also said he wanted to renegotiate current EU rules on banks’ capital requirements which he said were choking off the flow of credit to Italian companies.