|15 May, 2019

Italy's Salvini again raps EU budget rules, shrugs off impact on markets

European Union budget rules are "starving the continent" and must be changed, Italian Deputy Prime Minister Matteo Salvini said

Italian Deputy Prime Minister Matteo Salvini speaks during a meeting with Hungarian Prime Minister Viktor Orban in Milan, Italy, August 28, 2018.

Italian Deputy Prime Minister Matteo Salvini speaks during a meeting with Hungarian Prime Minister Viktor Orban in Milan, Italy, August 28, 2018.

REUTERS/Massimo Pinca

ROME - European Union budget rules are "starving the continent" and must be changed, Italian Deputy Prime Minister Matteo Salvini said on Wednesday, a day after he roiled financial markets by saying Italy should be ready to break the rules.

Salvini sent markets into a spin after saying on Tuesday that Rome should be ready to break the EU's deficit ceiling of 3% of gross domestic product and push debt to 140% of GDP if necessary, to lower unemployment.

His right-wing League party is campaigning along with other eurosceptic parties for European Parliament elections on May 26, but his comments are unnerving investors in Italian debt.

"If there are European rules that are starving a continent, these rules must be changed," Salvini told reporters when asked about his comments on Tuesday, which sent Italy's 10-year bond yield to a two-month high and pushed the spread between Italian and German yields to their widest level in three months.

On Wednesday, investor fears spread to the Italian share market and rippled through stocks across Europe.

Asked if he was worried that his remarks on breaking EU rules were widening the spread, he said: "Absolutely not, because Italians' right to a job, life and health comes first."

At 132 percent of GDP, Italian debt is proportionally the second-highest in the euro zone after Greece.

(Writing by Mark Bendeich Editing by Gareth Jones) ((Mark.Bendeich@thomsonreuters.com;))

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