The Italian government maintains its budget, and its commitment to the euro

Italian Interior Minister Matteo Salvini launched a tirage against the EU during his visit to MoscowMore

The European Commission's letter said the difference between the expected budget deficit and the one now foreseen was "unprecedented in the history" of EU budget rules, and that it means Italy would be unlikely to lower public debt as promised. At 1100 GMT it traded 0.1 percent up on the day at $1.1464.Italy is the third-largest economy of the 19-country euro zone, and a crisis there could unsettle the entire bloc.

The spread between yields on Italian benchmark government bonds and the German equivalent widened on Friday to a 5-and-a-half-year high of some 340 basis points before falling back to just over 300 points late Friday.

"I can not imagine a Europe without Italy or Italy without Europe", Moscovici said.

Writing on La Stampa newspaper on Friday, leading Italian economist Carlo Cottarelli said that the draft budget is a throwback to the 1970s and '80s, when Italy began racking up its huge debt because past governments used "the public deficit as a driver of growth".

The 5-Star Movement leader, Luigi Di Maio, insists that the draft contains unauthorized changes to extend a tax amnesty to Italians with bank accounts overseas.

Conte said Italy was "available for constructive dialogue" with the European Union in the coming weeks. The two have argued that Italy needs the extra spending to help boost economic growth.

In a joint press conference with Tria on Thursday, Moscovici was at pains to stress that "the European Commission is not Italy's enemy" and that its objective is not to criticize the ways in which eurozone members decide to spend money, but rather to make sure that each country plays by the rules that everyone has agreed to.




The document said the budget appeared to be in "particularly serious non-compliance" with European Union rules as its deviation from targets was "unprecedented", and gave Rome until October 22 to respond.

The draft Italian budget is extremely concerned in Brussels.

The government's budget plan targets a decrease of the deficit to 2.1 per cent in 2020 and 1.8 per cent in 2021.

While Italy's deficit is well within the 3 per cent limit laid out in treaties, the Commission has demanded smaller gaps for Italy to bring down its debt load. He told a late-night talk show that the draft budget presented to President Sergio Mattarella's office contained a proposal to extend a tax amnesty on money held overseas and brought back to Italy.

The 5-Star has opposed tax amnesties in the past but they are popular with the League's voter base, which traditionally comprises self-employed businessmen.

"The most important thing is to explain the budget to our european counterparts", said the head of the government, Giuseppe Conte, while the european Commission has called for "clarifications" prior to Monday noon on the budget that comes out largely of nails in europe.

Giuseppe Conte also faced discontent over the 2019 fiscal plan at home, calling a meeting of the government for Saturday to stave off an emerging internal rift over conditions of a partial tax amnesty.

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