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Italian deputy PM gives threat to sue EU boss over budget criticism

Italian deputy PM gives threat to sue EU boss over budget criticism

Matteo Salvini had claimed that EU president Jean-Claude Juncker’s comments have driven up Rome’s cost of borrowing

Juncker has been sued by Salvini for damages, and has been accused of pushing up the country’s cost of borrowing by likening Italy to Greece.

Salvini, who is also Italy’s interior minister and leader of the far-right League party, spoke after Juncker’s comments helped send the yield on Italian benchmark bonds to a four-and-a-half year high of 3.4%, while shares in Italian banks plunged. He said: “The European commission president Juncker, by equating Italy with Greece, sends the spread [gap] crazy. He could have spared us that.”

“He should drink two glasses of water before opening his mouth, and stop spreading non-existent threats. Or we’ll ask him for damages.” He continued.

Juncker had said earlier this week that the euro’s existence had come under threat from the Italian governing coalition’s pledge to press ahead with a budget deficit that will breach European Union rules. Salvini on his part, retorted by saying that Brussels was exaggerating the impact of Rome pushing ahead with its 2.4% budget shortfall for at least the next three years.

He stated that the rising cost of financing Italy’s debts was the fault of EU officials who had spooked investors and increased the gap between Italian and German borrowing costs– which is also known as spread.

“The words and threats of Juncker and other European bureaucrats continue to make the spread rise, with the aim of attacking the government and the Italian economy. We are ready to ask damages from those who wish Italy ill.” Added Salvini.

Juncker pressed on the fact that the European commission would need to be firm with Italy’s budget bill “or else the euro ends”.

Deputy prime minister, Luigi Di Maio, Salvini’s coalition partner and the leader of the Five-Star Movement, supported his ally’s uncompromising line to set a budget that could possibly push Italy’s debt to a GDP ratio higher than last year’s 131.2%.

This move prompted the sale of Italian government bonds and an increase in the interest rate that was charged by Italy’s lenders as investors—who feared that the country was heading closer to defaulting on its debts.

Claudio Borghi, the Euroseptic League MP stated that the country’s economic situation would be easier if it was outside the eurozone. However, he did not suggest that the government planned to leave the euro.

The coalition has argued that it will adopt a longer-term strategy to dig Italy out of the economic doldrums. It has insisted that the controversial spending plans will accelerate the economic output and turn around decades of stagnant growth, high level of youth unemployment and declining tax receipts.

Over the next year, the finance ministry expects the budget deficit to hit 2.4%, slightly higher than last year’s 2.3%. It is however hoped that the mix of spending, much of it on health and a universal basic income to boost infrastructure projects will increase the lackluster consumer spending to push GDP growth beyond last year’s 1.6%.

Di Maio stated: “We are not turning back from that 2.4% target, that has to be clear … We will not backtrack by a millimetre.”

Juncker stated at the weekend that he was concerned about plans to push up Italy’s public debt pile, proportionally the second highest in the EU after Greece’s.

He said: “Italy is distancing itself from the budgetary targets we have jointly agreed at EU level. I would not wish that, after having really been able to cope with the Greek crisis, we’ll end up in the same crisis in Italy.”

Salvini stated in response: “No one in Italy is taken in by Juncker’s threats.”—adding that the responding to the basic needs of its citizens was the government’s first priority and that budget criticism “will not stop us”.

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