Italy sticks to its budget targets, defying the EU

ALBERTO PIZZOLI | AFP | Getty Images

Italys Labor and Industry Minister and deputy PM Luigi Di Maio (L) and Italys Interior Minister and deputy PM Matteo Salvini smile before the swearing in ceremony of the new government at Quirinale Palace in Rome on June 1, 2018. 

The Italian government said Wednesday it would stick with its high-spending budget plan, in a rejection of calls by the European Union to revised its fiscal targets.

Rome clung onto its contested budget deficit figure of 2.4 percent of gross domestic product (GDP), a move which is likely to send tremors into domestic and European capital markets Wednesday.

The 2.4 percent proposed deficit dwarfs the previous Italian administration’s deficit goal of 0.8 percent of GDP.

Italy also kept its growth assumptions for 2019, 2020 and 2021 unchanged, despite both the EU and the International Monetary Fund (IMF) claiming those assumptions are too high.

Matteo Salvini, Italy’s deputy prime minister, said overnight that the government would stick to its budget targets for 2019, but would up asset sales and keep spending in check.

Tuesday was the official deadline for the Italian government to submit a revised draft budget to the EU’s executive body, the European Commission.