Skip to content
Subscriber Only
Politics
Economics

EU Flags Risks of Italy's Populist Budget as Bank Shares Slide

  • Five Star, League win 2.4% budget deficit in blow to old guard
  • Finance minister had sought lower spending to meet EU targets
Video player cover image
Near-Term Euro Cautiousness Is Warranted on Italy, Marinov Says
Updated on

Italian assets tumbled after populist leaders Matteo Salvini and Luigi Di Maio defeated their mainstream cabinet rivals to set a budget deficit target that threatens the country’s financial stability.

The European Union’s economy chief said Italy is taking a risky bet on fiscal stimulus considering the scale of its debts, after the two deputy premiers defeated Finance Minister Giovanni Tria in their first battle to set next year’s budget-deficit target at 2.4 percent of output. A 2 percent threshold had emerged as a litmus test for financial markets worried about a destabilizing spending spree.