I am thinking of going to Italy on holiday but everybody keeps telling me how expensive it is - people I might add who haven't even been. How do the prices actually compare with the UK / Spain
The cost of accommodation tends to be even higher than in the UK, which says quite a bit compared to many places on the continent. However, eating out is not particularly expensive and can be very reasonable if you choose a local trattoria rather than the more conventional restaurants. Alcohol and tobacco are cheaper than in the UK and probably not that much dearer than Spain. Car hire is reasonable and fuel prices similar to the rest of the previous 15 EU states.
If you can afford to get there you'll be considerably better off than millions of the folk who live and work there, so is it expensive? ....no.
Are you a mean git looking for people in another country to give you better than you get at home for significantly less money? ... probably.