MILAN (AP) — Italy's financial markets are shaken following the European Union's stinging rebuke of the new populist government's budget bill, which pushes the deficit far beyond previously agreed levels.

Italy's government borrowing rose, with the yield on the benchmark 10-year bond on Friday hitting its highest level since 2013. The increase suggests investors are more nervousness about the impending budget showdown with the EU.

Despite the strong language in a letter deeming the budget inadmissible, both the Italian premier and economic minister continued to voice optimism that they could win consent by illustrating their plans.

The European Commission's letter said the difference between the expected budget deficit and the one now foreseen was "unprecedented in the history" of EU budget rules, and that it means Italy would be unlikely to lower public debt as promised.