Italy’s Big Budget, Designed to Help Business, Is Hurting It
Company loans are becoming more costly after lofty government spending prompted higher rates on Italian bonds, raising banks’ borrowing costs
MILAN—Gian Enrico Grugni’s dairy farm near Italy’s financial capital shows how the country’s big-spending budget, which the government says will spur growth, is so far hurting the companies it is supposed to help.
Soon after Mr. Grugni applied for a €400,000 bank loan to buy land and build new cow stalls, Italy unveiled plans for a budget deficit that violated the European Union’s rules on fiscal discipline. Investors in turn demanded higher risk premiums for holding Italian bonds. And that led to bigger borrowing costs...