Germans launch Eurosceptic party to fight Merkel

A new Eurosceptic party opposed to the bail-out of the single currency will be launched in Germany next week, with the aim of challenging Angela Merkel at national elections later this year.

Led by an economist who has described attempts to rescue the euro as a "fiasco" and the bail-out of Greece as an "offence under the trade descriptions act", the new movement has attracted prominent supporters including Hans-Olaf Henkel, the former president of the German equivalent of the CBI.

Alternative for Germany, as it is named, is calling for a break-up of the eurozone and a return either to national currencies or a smaller eurozone area.

One proposal is for Austria, Germany, Finland and the Netherlands, among the healthiest economies in the eurozone, to quit the euro and create their own currency union.

The movement's founder, Bernd Lucke, a professor of macroeconomics at the University of Hamburg and a former World Bank adviser, said: "The current so-called euro-rescue policy is focused on short-term interests, especially the banks."

Bailed-out countries should be allowed to go bankrupt and bond investors should pay the costs, he told the Frankfurter Allgemeine Zeitung, Germany's leading conservative newspaper.

Germany has no significant Eurosceptic party on a national scale, but there are increasing signs of public discontent with the cost of saving the euro.

A Eurosceptic party called the Free Voters made inroads in Bavaria's regional elections, while a book by Thilo Sarrazin, which argued that Germany was sacrificing its national interest to atone for its guilt over the Holocaust, was a summer bestseller.

Alternative for Germany has greater potential to unsettle Merkel than previous Eurosceptic groups because of the clout of its supporters. The new party is being backed by several academics, including a group of professors who brought an unsuccessful legal action against the German government over the rescue of Greece. Henkel, a former president of the Federation of German Industries, has gone from being a euro-supporter to calling for a breakaway northern currency.

The new party will say that countries should not be allowed to take on the debts of other eurozone members.

The party will be launched next Monday in the town of Oberursel, north of Frankfurt, while its founding convention is planned for next month in Berlin.