ROME—Italy’s new government is laying the groundwork to challenge Europe’s financial orthodoxy and immigration rules, setting out a euroskeptic policy agenda in a country where public frustration with the European Union has supplanted once-broad support.
In his inaugural speech to Parliament on Tuesday, Prime Minister Giuseppe Conte said his government would push for a change of the rules underpinning the eurozone to spur growth and cut the country’s massive debt, which he said austerity policies helped worsen.
“A new wind” is blowing in Italy, said Mr. Conte, who heads a government supported by the maverick 5 Star Movement and the hard-right League, which have come out strongly against the eurozone’s limits on public spending.
“If populism is listening to the needs of the people, we accept” such a label, he said.
The government on Tuesday won a confidence vote in the Italian Senate, the first of two parliamentary votes of confidence that will fully empower it. The second, in the lower house where the government has a majority, is slated for Wednesday.
The speech sent yields on Italian debt higher and the country’s benchmark stock index lower, a week after global markets were rocked by investor concern over politics in Italy.
In his speech, Mr. Conte stuck to the coalition agreement the two parties struck. That agreement called for bold policy to turn around Italy’s economy—one of the most troubled in Europe—and confront a migration crisis that has brought 750,000 people to its shores since 2011.
The two crises have badly eroded support for the EU in a country that was historically one of its biggest boosters. In 2010, three out of four Italians had a positive view of Europe.
Many Italians blame the EU for unpopular moves taken to shore up the country’s finances and gradually reduce its massive debt, including an increase in the retirement age, cuts to the mostly free health-care system and a reduction in public services.
“We have to go to Brussels, slam our fists on the table, claim our rights and renegotiate the [EU] treaties,” said Giuseppe Dodaro, a 26-year-old medical student from the southern Calabria region who voted for 5 Star.
Most businesses don’t want Italy to leave the euro because of the chaos and uncertainty the move would bring and because any benefits would be short-lived. But many agree with plans by the new government to loosen the rules governing the currency to allow more government spending.
“The [euro] parameters are constricting Italy’s growth,” said Armando De Nigris, whose 130-year-old family-owned balsamic-vinegar business had revenue of about €80 million ($93 million) last year.
EU treaties require member countries to keep their budget deficits below 3% of gross domestic product or face disciplinary proceedings. EU authorities have shown flexibility toward countries that are making an effort but struggling with weak economies. But the bloc insists all members do their best to follow the rules.
Mr. Conte said the government plans to implement “revolutionary measures” that will reboot the Italian economy, including cutting corporate and individual taxes to as low as 15% and enacting huge welfare spending to support Italy’s legion of unemployed and poor.
The large deficits that would likely result from such a program could violate EU deficit rules. Opposition leaders on Tuesday derided the plans as “propaganda” that Italy’s strapped public finances can’t afford.
“How do you do it?,” asked Franco Mirabelli, a center-left senator. “With what resources?”
Italian 10-year government bond yields rose to 2.726% Tuesday afternoon from 2.537% on Monday, snapping a four-session streak of declines, while its two-year notes yielded 0.883%, up from 0.694%. Yields move inversely to prices.
Italy’s main stock benchmark, the FTSE MIB index, fell 1.2%, while the FTSE Italia All-Share Banks index fell 3.4%.
Both governing parties have been harshly critical of Europe’s handling of the migrant crisis. Mr. Conte pledged to push for a review of European rules on immigration, including the introduction of “compulsory and automatic” allocation of migrants from Italy to the rest of Europe.
The bloc has delayed overhauling its contentious system for dealing with the hundreds of thousands of people seeking asylum. Some African countries have signed repatriation agreement but it is expensive and cumbersome to people back.
“Europe abandoned us on the immigration crisis,” said Riccardo Fedeli, a 22-year-old graphic designer from the central Italian region of Umbria who voted for the League.
In recent days, Matteo Salvini, the head of the League, has thundered against immigration, accusing Tunisia of sending “convicts” to Italy’s shores. He has promised to deport hundreds of thousands of illegal immigrants.
“Either Europe gives us a hand to secure our country, or we will choose another way,” he wrote on Twitter on Monday.
Mr. Conte also said the government plans to promote the revocation of the EU’s sanctions on Russia. He reaffirmed Italy’s support of the North Atlantic Treaty Organization and the U.S. as a key ally.
contributed to this article.
Write to Giovanni Legorano at email@example.com and Eric Sylvers at firstname.lastname@example.org