ROME (Reuters) – The European Commission has rejected Italy's budget in 2019 and will ask Rome to present a new document within three weeks, the Italian news agency AGI reported on Tuesday, citing EU sources.
Flags of the European Union and Italy are seen in downtown Rome, Italy, on October 1
The Commission will hold a press conference at 15.30. (13:30 GMT) to officially announce the decision, AGI said.
Italy's right-wing and 5-star anti-establishment movement is locked in a dispute with Brussels over tax issues, and this month it's presented a budget that raises the deficit to 2.4 percent of GDP.
That was a sharp increase from the targeted 1.8% this year, which ignores the EU's requirement that the deficit should continue to fall on a balanced budget.
Since the Commission was given more powers in Member States' budgets in 2013, it has never asked a country to present a revised budget.
The AGI report has boosted Italian bond yields across the board.
The EU executive warned last week in a letter to Rome that the budget was an "unprecedented" departure from Italy's previous fiscal obligations, while Italian ministers negotiated insults with commissioners.
Italy has taken a more moderate tone in recent days, but Prime Minister Giuseppe Conte has said there is no reason to change the deficit target.
Reporting by Gavin Jones; Edited by John Stonestreet