Italy markets fall as EU rails against budget plan

Italy’s stock market fell sharply yesterday after the populist, eurosceptic government announced a sharp public spending increase that will push the budget deficit to 2.4 per cent of gross domestic product next year, risking a collision with the European Union.

The benchmark FTSE MIB dropped 4.6 per cent by the afternoon and helped drag down global markets. The fall came after the government announced its first financial targets since taking office three months ago.

Italy’s government partners, the 5-Star movement and the League, pressed for money to fulfill campaign pledges of a basic citizen’s income for job seekers and a flat tax. Finance minister Giovanni Tria, who is politically unaligned, had wanted to keep the budget deficit capped at no more than 2 per cent.