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Last week, the bloc’s finance chief Pierre Moscovici rejected the plans, declaring "public debt is the enemy of the people" as he justified their action against Italy's populist government. Brussels claims Rome’s plan present a “serious deviation” from recommendations set by the European Council in July. The Commission asked Italy to submit a revised draft budget for 2019 within three weeks. Brussels bosses argue the proposal poses “serious non-compliance” with the bloc’s tight fiscal policies. Italy's populist government, made up of right-wing Lega and anti-establishment Five Star Movement, are planning to run their budget at 2.4 percent GDP as of 2019.

The country’s GDP next year is forecast to be €1.86 trillion, with the planned deficit coming in at €44.23 billion. Last year’ Italy’s budget deficit was €39.691 billion, representing 2.3 percent of GDP of just over €1.716 trillion. It has a debt-to-GDP ratio of 130 percent, making it the eurozone's second most indebted country behind Greece. If Rome defies its orders from Brussels over its budget plans, officials could begin an “excessive deficit procedure”, leading to sanctions of 0.5 percent of annual GDP or €9billion. The European Union has told Italy their deficit target of 2.4 per cent of GDP is too high and demanded the country make a change before approving their budget.

Italy budget: Luigi Di Maio has remained defiant after the EU rejected its budget plans

But Deputy Prime Minister Luigi Di Maio told the country’s Radio 24: "I do not think we should talk about changing the budget on the issue of the deficit at 2.4 percent of GDP for two reasons: first because we keep our promises, second because we are a sovereign state.” He added global markets are not worried about its budget or the EU’s rejection of the plans. Mr Di Maio also again attempted to dismiss rumours Italy’s dispute with the EU could lead to it leaving the eurozone. Speaking of market fears, he said: ”They are worried about a false story of Italy wanting to leave the euro and Europe. “When we talk about intervening, it means monitoring the situation, hearing the credit institutions and assessing the critical issues.

Italy budget: Giuseppe Conte maintained its budget is "serious"

“I am confident that in the coming weeks the spread will start to fall because it will be the weeks of dialogue with the EU.” Italian Prime Minister Giuseppe Conte also played down fears of the country’s relationship with Italy deteriorating to unrepairable damage. He said: "I will do my part. We need a constructive dialogue and our budget is serious. We must focus on our goal.” The latest comments come as European Central Bank President Mario Draghi warned it would not come to Italy’s rescue and fund its planned deficit. He remains confident a compromise can be reached between Brussels and Rome, emphasising how much the stand-off is already costing Italy because of the rising yields on its Government debt.

Italy budget: Mario Dragi warned the ECB does not finance government deficits