November 20, 2018 / 9:01 AM / 22 days ago

Solution over Italy budget can be found with EU, but main measures to stay: Deputy PM

FILE PHOTO: Italian Deputy PM Luigi Di Maio speaks at a rally of his 5-Star Movement at Circo Massimo in Rome, Italy, October 21, 2018. REUTERS/Max Rossi

ROME (Reuters) - A solution with the European Commission over Italy’s budget can be found but the main measures contained in it must not be touched, Deputy Prime Minister Luigi Di Maio said on Tuesday.

Italy is at loggerheads with the Commission and many fellow euro zone governments over its expansionary 2019 budget. Brussels says the package it fails to bring down debt as required by EU rules, but Rome is refusing to change it.

“I do not know what the Commission will decide, but if they open up to dialogue, a solution - which must not envisage the scrapping of the (main) measures of the budget law - can be found,” Di Maio told Radio Rai1.

The spread between Italian 10-year bond yields and their German equivalents rose to nearly 335 basis points on Tuesday, not far from the 340 basis points maximum reached a month ago.

“Italy is certainly paying the consequences of the European Union being a stonewall,” Luigi Di Maio said, answering a question on whether the government feared putting Italian citizens’ savings at risk.

In budget, the government has targeted the deficit to rise to 2.4 percent of gross domestic product next year, remaining below the EU’s 3 percent ceiling but reversing a previous commitment to reduce borrowing.

Reporting by Giulia Segreti, editing by Davide Barbuscia and Angus MacSwan

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