Europe vote will decide if Italy stays in EU - League lawmaker

By Elvira Pollina

MILAN (Reuters) - A prominent member of the far-right League party said on Friday Italy will have to leave the European Union unless the upcoming European Parliament elections show a decisive shift toward populist parties.

"Either we succeed in changing (Europe) now, or we will have to leave," Claudio Borghi, chairman of the lower house budget committee and the League's economics spokesman, said, referring to the European election.

"I think this is the last opportunity," Borghi said at a conference on Europe in Milan, calling the European project "disastrous and toxic".

Italian government bond yields jumped on Borghi's comments, which revived concerns about the country's commitment to the euro common currency.

Leaving the EU is not part of the programme of Italy's populist governing coalition, though the League and its partner, the 5-Star Movement, are frequently critical of the bloc.

But a leading 5-Star lawmaker later denied any plans for a departure from the EU and warned against making claims that could roil financial markets.

"We have no intention to exit the EU, and for this reason it would be best to avoid making statements that put at risk investor confidence," Francesco D'Uva, head of the 5-Star faction in the lower house of parliament, said in a statement.

The League has doubled its support since a national election about a year ago, according to polls, while the 5-Star has lost ground, turning the European parliament elections into a crucial test for the balance of power within the government.

League leader Matteo Salvini has regularly denounced EU officials in Brussels as unelected bureaucrats who he blames for Italy's economic and public finance difficulties.

Salvini is allied with far-right groups in other European countries and is working with U.S. President Donald Trump's former political strategist Steve Bannon to build a network of parties opposed to closer European integration.

Borghi, an economist, has repeatedly said that Italy would be better off with its own currency, adding however that dumping the euro is not in the government's programme because of 5-Star opposition.

On Friday, Borghi also reiterated his call for the European Central Bank to become a lender of last resort. "In this way no spread (between Italy and Germany bonds' interest rates) would exist anymore," he said.

Borghi said that according to the latest polls, the League should come off as the biggest single party in the new European parliament, and he hoped the League and the 5-Star would be part of the same parliamentary group.

(Reporting by Elvira Pollina; Writing by Giselda Vagnoni; Editing by Steve Scherer and Mark Heinrich)