ITALY’S populist government came to power in June on the back of extravagant promises. The hard-right Northern League, headed by Matteo Salvini, said it would slash taxes. The anti-establishment Five Star Movement (M5S), led by Luigi Di Maio, offered an income guarantee for the unemployed and poor. The two parties formed a coalition government and, ignoring Italy’s public debt of almost 132% of GDP, promised a spending spree.

Experts said that common sense would prevail once the new populist leaders understood the facts. Until hours before the approval on September 27th of the framework for next year’s budget, investors were being assured the populists’ bark would prove worse than their bite.

But the populists did what they said they were going to do. Mr Salvini and Mr Di Maio endorsed a deficit that, at 2.4% of GDP, was three times as large as the 0.8% deficit that had been planned by the previous government to keep paying down the debt and prepare for the approaching end of the European Central Bank’s bond-buying programme, which has helped contain the cost of Italy’s borrowing. The populist coalition’s own finance minister, Giovanni Tria, (a technocrat), had calculated that a deficit of 1.6% was the maximum to keep the debt from rising again. Worse, the plan is to keep the deficit at 2.4% for three years so that the coalition partners can fully implement their contrasting policies.

On September 28th the yield on Italy’s benchmark ten-year bonds soared more than 35 basis points and the Milan bourse lost more than 4%. The image that best captured the political moment was of Mr Di Maio defiantly punching the air from the balcony of the prime minister’s office. For months, his coalition partner and fellow-deputy prime minister, Mr Salvini, has been setting the government agenda. The League leader’s headline-grabbing refusal to accept migrants rescued from the Mediterranean has helped boost his party’s popularity from 17% at the election last March to an average of almost 32% in recent polls. The M5S, by contrast, has slipped more than four points to below 29%.

This time, it was Mr Di Maio who named 2.4% as his aim, issued threats that his party would not vote for a framework that omitted it and got what he wanted. His triumph should boost the M5S’s popularity. But it was also a reminder that the figures that really count are the Five Stars’ 221 seats in the 630-seat lower house and its 109 (out of 315) senators. Unless Mr Salvini wishes to bring down the government, he has to remain in step with the M5S on the most important issues. His approval of a three-year time horizon suggests he is in no hurry to break up their partnership.

Long before 2021, however, the answer will be known to the underlying question this audacious move poses: have Italy’s populists started slipping down a slope that will lead Italy to a Greek- or Argentinian-style financial abyss? There are good reasons to fear they have. The growth they seek from the fiscal stimulus, if it comes at all, will arrive with a delay. In the meantime, the cost of borrowing in Italy could rise sharply. That would raise the cost of servicing the debt (interest payments alone make up nearly 8% of government revenue, or about 3.6% of GDP), raise costs for business and weaken the balance-sheets of domestic banks that are the main holders of Italian debt. A financial cyclone, if one begins, may be hard to bring under control.