Salvini Says Italy Could Break EU Debt Rules to Boost Employment

(Bloomberg) -- Deputy Premier Matteo Salvini said Italy would be ready to break European Union fiscal rules as a way to boost employment, sending ripples through financial markets.

“If we need to break some limits, like the 3% or the 130-140%, we’ll go ahead,” Salvini told reporters in Verona, while campaigning ahead of this month’s European parliamentary elections, in reference to the bloc’s limits on budget deficits and government debt.

Italian 2-year bonds fell, with yields touching the highest level since February following the comments by Salvini, who effectively runs Italy’s populist coalition along with fellow Deputy Prime Minister Luigi Di Maio. The yield on the benchmark 10-year bonds rose 5 basis points to 2.75%.

Salvini, who has repeatedly lambasted Brussels during the campaign, said earlier this month that taxes should be cut even if that breaches the EU’s deficit-GDP limit of 3 percent. The European Commission sees Italy’s budget gap reaching 3.5 percent in 2020, assuming no VAT hike or similar measure.

“Until unemployment is halved in Italy, until we reach 5%, we’ll spend everything that we have to spend,” Salvini said. “If someone in Brussels complains, that’s not our problem.”

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