Italy could face €3bn fine over high levels of public debt

The European Union could slap Italy with a €3bn (£2.7bn) fine for breaking the bloc’s rules on public debt, the country’s deputy prime minister said today.

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Matteo Salvini said he expected a fine to soon arrive in a letter from the EU over Italy’s high levels of debt, which have been compounded by a stagnating economy.

“Let’s see if we get this letter where they give us a fine for debt accumulated over the past and tell us to pay €3bn,” he told an interviewer on Europe’s RTL radio.

Salvini’s right-wing League party triumphed in the European elections on Thursday, with Sunday’s results revealing the party received 34 per cent of the vote in Italy.

The resounding result teed up another spat between Rome and Brussels. An emboldened Salvini has already signalled he will take on the EU over the issue of debt.

Last week, Salvini said the EU should change its rules to allow taxes to be lowered in Italy without overshooting the union’s rule that deficits must not exceed three per cent of GDP.

“The League’s goal is to change EU rules to be able to lower taxes,” he said on RTL radio.

Earlier this month the EU said Italy’s budget deficit – the amount the government borrows to spend each year –is set to rise to 3.6 per cent of GDP in 2020, as higher spending, lower taxes and lower growth combine to push up the public debt.

The spending plans of Italy’s coalition government, which is made up the Five Star Movement and the League, have long caused consternation in the EU, which attempts to encourage economic stability by limiting public spending.

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Investors have been worried by the League’s victory in the Euro elections, causing them to sell off Italian debt. The yield on the Italian 10-year bond rose to 2.72 per cent today, after closing at 2.68 per cent yesterday.