The cash-strapped country’s new populist coalition government is threatening to rip up previous budget agreements with Brussels and aim instead for a public deficit of 2.4 per cent of gross domestic product, far higher than the 1.6 percent target indicated by finance minister Giovanni Tria.
Mr Tria is now arguing Italy’s economic growth will outperform EU forecasts insists debt will continue to fall that despite a rising deficit.
But Mr Juncker has rejected Mr Tria’s claims and urged him not to go ahead with the proposals.
He said: “Italy is distancing itself from the budgetary targets we have jointly agreed at EU level.
“I would not wish that, after having really been able to cope with the Greek crisis, we’ll end up in the same crisis in Italy. One such crisis has been enough.
“If Italy wants further special treatment, that would mean the end of the euro. So you have to be very strict.”
Italy’s powerful deputy prime minister Matteo Salvini has already declared “I do not care” if the European Commission rejected the budget proposals.
The leader of the nationalist League party, which shares power with the anti-establishment Five Star Movement, told supporters: “No one in Brussels can tell me it is not time. If Brussels says I cannot do it, I do not care. I will do it anyway.”
But eurozone finance ministers, who gathered for talks in Luxembourg today, insisted all governments must respect the bloc’s spending rules and demanded more detail from Rome on the budget plans.
French economy minister Bruno Le Maire said the economic fate of all 19 eurozone members was linked and said the budget rule book was meant to protect countries from higher borrowing costs.
Mr Le Maire said plans agreed on last week in Rome would need to be studied in detail by the European Commission, whose assessment would then be passed onto national capitals.
He said: “I just want to make very clear that there are rules, and rules are the same for every state.
“Because our futures are linked, the future of Italy, France, Germany, Spain, Luxembourg, all the members of the eurozone are linked”.
Brussels is due to respond to the plans when they are formally submitted by mid-October but European Commission officials have already confirmed the Italian plans represent a “very significant deviation” from commitments made by the country’s previous administration.
EU’s economy commissioner Pierre Moscovici said: “What I note is that the Italian government seems to prioritise public expenditure.
“Well, public expenditure can make you popular in the short term but in the end you have to be honest about who pays. It’s always the citizens who pay.”
Finland’s finance minister Petteri Orpo said: “Rules are for everyone. Everyone has to play by the rules”.
The eurozone sets overall targets of 3 percent annual deficits and commits countries to move toward 60 percent overall debt.
Italy’s debt currently stands at about 130 percent of GDP.