Italy and the EU clash over budget plan

Italy accused the EU of "economic terrorism," as its row with economic leaders in the bloc deepened on Monday. EU finance ministers warned Italy that it must abide by EU rules on public spending.

The war of words between Rome and Brussels is centered on Italy's new budget proposal, which seeks to increase spending and cut taxes, but would raise Italy's debt and breach EU budget rules. 

"There are European institutions playing at bringing terrorism to the financial markets," said Italy's Deputy Prime Minister Luigi Di Maio who heads the populist Five Star Movement (M5S). 

'One crisis was enough'

Italy's budget proposal has bred market anxiety and sparked fears of an Italian debt crisis. The country's public debt stands at 132 per cent of gross domestic product, the second-highest debt-to-GDP ratio in the eurozone.

"It is up to the Italian government to show that it has a sustainable and credible budgetary plan," said Eurogroup chief and Portugal's finance minister Mario Centeno.

European Commission President Jean-Claude Juncker said late Monday that Italy must be treated "strictly and fairly" to prevent a new crisis.

"One crisis was enough, and we have to prevent Italy from being able to get a special treatment here that, if everybody were to get it, would mean the end of the euro,"Juncker said.

Read more: Italy between debt and utopian dreams

Italy's Interior Minister Matteo Salvini rejected the remarks and remained defiant. "In Italy, nobody is buying the threats of Juncker, who is now comparing our country to Greece," he said.

Salvini defended the proposal saying it his government merely sought to prioritize people's rights to work, security and health.

EU Economic Affairs Commissioner Pierre Moscovici will be responsible with evaluating Italy's new budget, which is set to be submitted to Brussels on October 15.

Read more: Italy and the eurozone: the cloud returns

Rome could face punitive measures by its EU partners if it goes through with a budget plan that breaks the bloc rules on running excessive deficits and high debt.

jcg/rt (AFP, dpa)

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