(Bloomberg) -- Italy’s Matteo Salvini has a new medicine to fix his country, and he calls it “the Trump cure.”
After being the steady hand in Rome’s populist coalition government for most of the past year, the deputy prime minister and anti-immigrant League party leader projected himself as the country’s Donald Trump on Thursday.
It cemented his position as the radical champion of European Union-bashing, while his governing partner, Five Star Movement’s Luigi Di Maio now looks more the moderate than maverick.
The reversal of roles comes during intense campaigning for the European Parliamentary elections on May 26, which Salvini wants to turn into a show of strength for Europe’s army of nationalist leaders trying to upend the continent’s politics. But the new act is also likely to escalate tension within the Italian government, which already has rattled financial markets.
Within hours of each other, Salvini and Di Maio repeatedly raced to differentiate themselves, sending stocks and bonds on roller-coaster sessions.
Salvini set the ball rolling earlier this week with a threat to challenge deficit and debt rules set by Brussels. Di Maio responded on Thursday by saying the government wants to rein in Italy’s debt. It was 132% of gross domestic product at the end of last year, the highest in the euro region after Greece.
“Nobody wants to go over 140%,” Di Maio said during an event in Florence. “Otherwise, the debt-to-GDP level would be out of control.”
Back came Salvini with praise for Trump. Italy should copy what the U.S. president did on tax cuts, have his courage “without giving a damn about the no’s, limits, constraints, doubts,” Salvini told reporters on the campaign trail in southern Potenza, according to newswire Ansa.
Europe is increasingly divided between Brussels loyalists and rogues, from Brexit Britain to Hungary and Poland. But Italy is a founding member of the postwar integration project that became the European Union. It’s also part of the euro region’s core and, critically for investors, one of the continent’s biggest bond markets.
The competition between the duo in Rome keeps unnerving markets and that’s likely to continue in the runup to the election, which both have defined as a popular vote on their party. The risk premium on Italy’s government 10-year bonds compared with benchmark German bunds touched the highest since February earlier this week.
Friday will offer plenty of opportunities for the unlikely couple to clash over EU rules. Salvini will speak at the Foreign Press Association in Milan, his northern stronghold, before hosting a rally with fellow nationalists including France’s Marine Le Pen on Saturday afternoon.
Di Maio, who is also deputy premier, has a series of campaign events scheduled, including visits to companies Piaggio Aerospace and Bombardier in northern Liguria, the area around Genoa. Di Maio’s latest moderate stand contrasts with comments he made earlier this month, when he said the EU’s budget restrictions would be up for discussion after the European vote.
But speaking earlier from Brussels, Finance Minister Giovanni Tria poured water on the comments by Salvini and Di Maio. “It’s normal that during an election campaign financial markets are particularly reactive, but the facts are what they are and we are committed to meet our targets.”
Di Maio’s new centrist stand is an attempt to attract voters wary of Salvini’s overtures to the far right and his crusade against immigration and crime. And rising tension between the two partners is just a taster of what might happen if the government survives after the May vote, something on which they both agree. In the fall, they will have to compromise on the 2020 budget law.
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