Market jitters as Italy's Salvini rejects EU budget discipline rules
May 15 2019 07:00 PM
Matteo Salvini
Matteo Salvini


Italy's far-right deputy premier and Interior Minister Matteo Salvini has vowed to ignore eurozone budget discipline rules, amid surging risk indicators for Italian government debt.

‘It is not my right, it is my duty to go beyond certain European constraints which are starving millions of Italians,’ Salvini said late on Tuesday on RAI public television.

He replied to a question on whether he wanted to flout the eurozone rule which forces countries to keep their deficit below 3 per cent of gross domestic product (GDP).

Salvini, who is spearheading a new alliance of European far-right groups including his League party, returned to the issue in a Wednesday interview with Corriere della Sera newspaper.

He dismissed eurozone rules ‘as outdated fiscal constraints imposed by the EU, old and meaningless’ and said his approach towards them would be: ‘I don't give a damn.’  The other half of Italy's populist coalition, deputy premier and Five Star Movement leader Luigi Di Maio, dismissed his ally's remarks as ‘irresponsible.’  He blamed them for rising market nervousness over Italy.

Talk of fiscal profligacy in Italy usually spooks investors, since the country's public debt, standing at more than 130 per cent of GDP, is one of the highest in the world.

The spread, or interest rate differential between Italian and German benchmark 10-year government bonds, has jumped in recent days above 280 basis points, a three-month high.

Economy Minister Giovanni Tria issued a statement saying that upwards fluctuations in the spread were ‘unjustified but understandable’ in the run-up to next week's European Parliament elections.

Salvini's anti-Brussels tirade came as he prepares for a Saturday rally in Milan with other European, eurosceptic and far-right political leaders, to canvas votes for the May 23-26 EU-wide ballot.

Last fall, Italy had a major row with Brussels over budget discipline, and the clash is likely to resume later this year over Italy's spending plans for 2020.

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