The country’s deputy prime minister has said the government will not adjust its 2019 budget deficit target and insists it does not want to leave the bloc or the single currency, despite the European Commission demanding changes.
Brussels has told Italy their deficit target of 2.4 per cent of gross domestic product is too high and demanded the country make a change before approving their budget.
But Italy’s Deputy Prime Minister, Luigi Di Maio, said his government is not “respecting” the EU’s rules and reiterated the Italian’s desire to stay in the Eurozone.
He said: “Markets are not concerned about Italy not respecting the EU budget rules.
“Investors are worried about false storytelling according to which Italy wants to leave the euro and the European Union.
“That is not that case.”
But financial markets reacted negatively when the budget was announced as investors feared the worst over Italy’s defiance of EU rules and it’s mountain of debt which is the second highest in the Eurozone.
Mr Di Maio said the Italian government is monitoring the situation and that he was confident the markets would return to normal in the next few weeks as he tried to alleviate fears.
He added: “In the following weeks we will discuss our budget with the European Union and it will be possible to read out the details of our fiscal plan.”
The comments were made after Mr Di Maio’s fellow deputy prime minister in the ruling 5-Star Movement coalition government, Matteo Salvini, also vowed he would not change the budget before the EU’s three week deadline.
The bloc has put a time limit on Rome to adjust the deficit target figure but Rome’s refusal to move has caused tensions to soar with the EU
During a radio interview Mr Salvini insisted his country’s budget was the only way to cut the huge public debt, which stands at 131.2 per cent of GDP.
He said the EU is “not attacking a government but a people”.
Mr Salvini added: “These are things that will anger Italians even more and then people complain that the popularity of the European Union is at its lowest.
“We won’t subtract one single euro from the budget, I personally am available to go meet the president of the European Commission to explain how Italy’s economy will grow thanks to this manoeuvre.
“But no one will take one euro from this budget.”