But the EU said that risked delaying the reduction of Italy's massive debt mountain, which is the second highest in the euro zone behind Greece at 180 percent of national output. The spending plans were the product of fraught negotiations between the new coalition in Italy, an unlikely partnership between the anti-establishment Five Star Movement and the centre-left Democratic Party. "We will provide all clarifications to the EU, we are not concerned," said Italian Prime Minister Giuseppe Conte. "It is a necessary dialogue with Brussels from which we will not escape."
France's government unveiled a draft 2020 budget last month with more than nine billion euros ($10 billion) in tax cuts for households in its bid to move on from "yellow vest" protests while still cutting the deficit. But the EU warned that these plans were "not in line" with commitments made to Brussels, and risked a "significant deviation" from the European rulebook on budgets. Crucially, the commission criticised Rome and Paris for under-delivering on so-called structural reforms, changes to long-term costs such as pensions, hiring and firing laws and other politically difficult reforms.