Italy's populist government is standing firm on its new budget proposals, but it could now pay the price for doing so with the EU launching disciplinary measures against the country.
The European Commission — the EU's executive arm — said that Italy's 2019 draft budget does not comply with the EU's requirement that member states work to reduce their debt piles. As such, the Commission will now launch what's known as an "Excessive Deficit Procedure" that could lead to Italy being fined.
Italy's Deputy Prime Minister Matteo Salvini remained defiant after the news, saying he will talk to the Commission "politely, as always, but will carry on."
He said Italy would explain its structural reforms and investment plans to the EU. He said he hoped EU sanctions would be avoided and that if not, these would be "disrespectful" to Italians, Reuters reported.
Italian Prime Minister Giuseppe Conte, who is largely seen as a technocratic leader under Salvini and his co-Deputy Prime Minister Luigi Di Maio, said the government is convinced over its budget. He said he will discuss the matter with European Commission President Jean-Claude Juncker on Sunday.
For its part, the EU's Vice-President for the Euro and Social Dialogue, Valdis Dombrovskis, said Italy is of common concern and that all euro zone countries are "on the same team and should play by the same rules." He also said that Italy's budget plans could harm the country's growth prospects and could mean more austerity at a later date.