Concern about the spending plans of Italy’s new populist government’s is shaking the country’s financial markets again.
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The difference between the Italian 10-year bond yield and the sturdy German benchmark topped 3 percentage points on Tuesday, the highest since market jitters began over the formation of the government in May.
On Monday, Economic Minister Giovanni Tria was warned by his European counterparts that Italy’s plans break the rules. He promised they would promote growth.
Italy’s government announced last week it would increase spending next year, pushing the budget deficit to 2.4 percent of GDP despite pledges to keep it under 2 percent. While still within the 3-percent limit set by EU rules, the higher limit places at risk Italy’s ability to bring down its huge public debt.
