'Wash your mouth out' Italy's Salvini tells EU Commissioner

By Yann Le Guernigou

PARIS (Reuters) - The EU's top economic official said on Thursday he feared "little Mussolinis" might be emerging in Europe, drawing a furious response from Italy's far-right interior minister who accused him of insulting his country and Italians.

Frenchman Pierre Moscovici, who is the European Union's economics affairs commissioner, said the current political situation, with populist, far-right forces on the rise in many nations, resembled the 1930s when Germany's Adolf Hitler and Italian fascist chief Benito Mussolini were in power.

"Fortunately there is no sound of jackboots, there is no Hitler, (but maybe there are) small Mussolinis. That remains to be seen," he told reporters in Paris, speaking in a jocular fashion.

Moscovici, a former French finance minister, mentioned no names, but Matteo Salvini, who is a deputy prime minister and heads Italy's anti-immigrant League, took it personally.

"He should wash his mouth out before insulting Italy, the Italians and their legitimate government," Salvini said in a statement released by his office in Rome.

Salvini took advantage of the spat to set out once again his grievances with France, which he accuses of not doing enough to help deal with migrants from Africa and of having plunged Libya into chaos by helping to oust former strongman Muammar Gaddafi.

"EU Commissioner Moscovici, instead of censuring his France that rejects immigrants ... has bombed Libya and has broken European (budget) parameters, attacks Italy and talks about 'many little Mussolini' around Europe," Salvini said.

TOO MUCH DEBT

In other comments at the Paris event, Moscovici said Italy needed to cut wasteful spending and prioritise investment and infrastructure spending that will help stimulate growth and productivity.

"It's in Italy's interest to reduce its very high public debt," Moscovici said. "It would be a lie to think one can invest more with a higher deficit. If that happens, you end up with more debt and less capacity to invest."

Italy is preparing its 2019 budget, a process that has heightened tensions within the governing coalition, which comprises Salvini's League and the anti-establishment 5-Star Movement.

Yields on Italian bonds have risen sharply, reflecting investor concerns about the stability of Italy's finances.

Moscovici said it was critical for Rome to come up with a workable budget.

"The Italian budget needs to be credible, credible at a nominal level but also credible in terms of the structural reforms that are required," he said. "There needs to be a significant effort on the structural side."

Moscovici added that he was working closely with Italy's finance minister in what he described as a "constructive climate" and said he hoped that would continue.

(Writing by Luke Baker and Crispian Balmer; Editing by Richard Lough and Gareth Jones)