Salvini Aide Unloads on Speculators as Italy Yields Pass Greece

(Bloomberg) -- A senior economic adviser to Deputy Premier Matteo Salvini called for European governments to set up a shield to ensure protection from speculators, branding the current spread between Italian and Greek bond yields “incredible.” Yields on Italian 5-year debt overtook those of Greece on Thursday.

The rightist League’s Claudio Borghi, who heads the budget commission in the lower house, told Bloomberg Television that the absence of controls from central banks means bonds “are free to float due to the speculation of the day.”

“It is something that should be sorted out because of course Italy is not Greece,” Borghi said, when asked about the yield on Italian 5-year bonds moving higher than their Greek counterparts. The current spread is “incredible because we all remember that for example Greece owes Italy tens of billions because we were part of the rescue package.”

Italian bonds are under pressure after moves by U.S. President Donald Trump on trade tariffs, with the Italian economy heavily dependent on exports, and because of looming tension between the ruling populist coalition and the European Commission over spending plans.

Borghi said news like the trade tariffs Trump ordered on Mexico should not affect the bond market. “We are planning to set up a big conference to have this problem of the spread sorted out, because it is not acceptable,” he said.
Economic growth is “probably the number one problem for Italy,” Borghi said. “At the moment, what Italy needs apart from reform to boost competitivity is a bit of breathing space on the fiscal stance.”

Asked whether the fragile coalition of the League and the anti-establishment Five Star Movement could collapse, Borghi said, “as long as we are able to carry on with the reforms that are in the contract, the government will carry on.” The League and Five Star drew up a package of reforms, which they refer to as their contract, before the government was sworn in a year ago.

--With assistance from Zoe Schneeweiss.

To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Jerrold Colten, Marco Bertacche

©2019 Bloomberg L.P.