MILAN—Gian Enrico Grugni’s dairy farm near Italy’s financial capital shows how the country’s big-spending budget, which the government says will spur growth, is so far hurting the companies it is supposed to help.

Soon after Mr. Grugni applied for a €400,000 bank loan to buy land and build new cow stalls, Italy unveiled plans for a budget deficit that violated the European Union’s rules on fiscal discipline. Investors in turn demanded higher risk premiums for holding Italian bonds. And that led to bigger borrowing costs for...