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It is feared that the budget plan will prevent the reduction of the country 's debt – the second largest in the euro area, totaling 2 300 billion euros (2.6 trillion euros). In Europe, countries should not have an annual deficit of more than 3% of gross domestic product (GDP). However, in the case of Italy, its debts led Brussels to ask Rome to balance.
The Italian Prime Minister defended his budget for free spending this week, after officials in Brussels criticized the projects. The Brussels-based institution sent Thursday a letter to the Italian Finance Minister, Giovanni Tria, warning that the draft budget 2019 seemed to indicate a "particularly serious breach of fiscal policy obligations". in the European rules. The Italian government has until Monday to respond to the latest letter from the commission.
Bryn Jones, head of fixed income at Rathbones, told CNBC's "Squawk Box Europe" channel on Friday that he would rather wait to see what happens before taking a stance on Italian debt.
"The yields are currently very high, but I would not add anything to it until this story repeats itself a bit, and I'm not convinced that we will achieve a very short-term solution," Jones said.
