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AFP
Italian Prime Minister Giuseppe Conte and his two MPs under pressure from Brussels
The European Commission has taken the first step towards sanctioning Italy on its national budget, continuing to argue over the country's finances.
In October, the EU's executive body rejected Italy's draft budget and told it to make changes – an unprecedented event in European politics.
Italy, however, has stated that it will stick to its high spending targets.
On Wednesday, the Commission said that a formal procedure that could lead to financial sanctions was "justified".
Vice-President Valdis Dombrovskis said: "With what the Italian government has put on the table, we see a risk of instability for the country."
He added that the EU disciplinary measure known as the "excessive deficit procedure" was now appropriate.
The Commission had already asked the populist – led Italian government to revise its budget, because of the high level of public debt, which, according to eurozone officials, could create instability for the EU. whole block.
But the Rome government has not made any significant changes, putting the country in a confrontational situation with Brussels.
According to the rules of the sanction procedure, a fine of 0.2% of GDP (which would cost the Italian economy billions of euros) and a suspension of the payment of any development fund could lead to sanctions. .
However, the process could take a long time and Mr Dombrovskis said that he was always open to discussions with Italy on how to settle the dispute.
Italian Deputy Prime Minister Matteo Salvini told reporters that he remained convinced of his government's budget plans and that "we will discuss this in a year's time".
How did we come here?
The current Italian government took office in June 2018 and is a coalition of the five-star anti-establishment movement and the right-wing League.
Widely regarded as a populist coalition, the first national budget of the new government was developed in September.
The problem for EU officials was its high cost for a country facing massive debt. The government planned to generate a budget deficit of 2.4 percent of GDP to finance its plans.
The Commission had hoped for a reduced budget cost, with the previous government forecasting a deficit of 0.8%.
Italy is the third largest economy in the eurozone, but its debt is more than two billion euros, accounting for 131% of the country's total economic output.
To put this in context, it is the second country behind Greece (178%) and much higher than the UK (88%) or Germany (64.1%). The debt is equivalent to about € 37,000 for each person in Italy.
The government argues that additional investments are needed to revive the gloomy Italian economy, which has still not recovered from the financial crisis of ten years ago.
The Italian statistical agency Istat announced Wednesday economic growth of 1.3% in 2019 and 1.1% in 2018.
Although the budget would help boost demand from the Italian economy, its estimate for 2019 is lower than the 1.5% figure set by the government.
Shortly before the government's arrival of the League's five-star government, Istat had forecast 1.4% growth in 2018 and announced Wednesday that growth was slowing compared to 2017.
