Italian officials must stop questioning the euro and need to “calm down” in their budget debate as they have already caused damage to firms and households, European Central Bank President Mario Draghi said on Saturday.
A senior member of Italy’s ruling coalition shot back that it was Draghi who should calm down, rather than draw attention to occasional comments on the euro which were personal opinions and had no implications for government policy.
Italy’s government is in a war of words with European officials over its plans to triple the deficit next year, backtracking on a previous pledge to narrow the budget gap in one of the bloc’s most indebted countries.
“A budgetary expansion in a high debt country becomes much more complicated … if people start to put in question the euro,” Draghi told a news conference at the International Monetary Fund’s annual meeting in Indonesia.
“These statements … have created real damage and there’s plenty of evidence that spreads have increased in connection with these statements,” Draghi said. “The results of which is that household and firms pay higher interest rates on loans.”
Italian bond yields rose sharply this month after a senior…
