ROME (AP) — Italy's stock market has plunged after the new populist government announced a sharp public spending increase that will push the budget deficit to 2.4 percent of gross domestic product next year.

The benchmark FTSE MIB dropped 2.2 percent early Friday, hours after the government announced its first financial targets since taking office three months ago, capping a tense standoff with the technocratic finance minister.

Government partners the 5-Star movement and the League pressed for money to fulfill campaign pledges, namely a basic citizen's income for job seekers and a flat tax, against Finance Minister Giovanni Tria's attempts to keep the budget deficit capped at no more than 2 percent.

The 2019 deficit target is a significant jump from the 2018 target of 1.6 percent, set by the former center-left government.