In an unprecedented rebuke, the European Commission asked Italy last month to submit revised spending plans by November 13, after it essentially rejected the country's budget for 2019, saying that it constitutes a clear deviation from commonly agreed rules.
European Commissioner for Economy and Finance Pierre Moscovici that the cost of servicing Italian public debt is already equal to the country's entire spending on education - €65 billion a year, before adding that the Commission and the Italian government are not now involved in negotiations on a compromise regarding a revised budget.
EU Economy Commissioner Pierre Moscovici recalled that Italy has until November 13 to submit a new budget plan. "The Ministers supported the European Commission's assessment and invited Italy to cooperate closely in the preparation of a new version of the budget in accordance with our budget rules". "A policy with a higher public debt is not growth-friendly", Moscovici added.
"It would be inevitable", a senior European official told AFP.
Italy has Europe's fourth-largest economy and the bloc would struggle to bail it out.
"When a member does not respect the rules it has an impact on the others", Moscovici said.
Deputy Prime Minister Matteo Salvini, head of the League, responded by calling on his supporters to demonstrate on 8 December in Rome, to say "peacefully" to the "Gentlemen of Brussels: let us work, live and breathe". We're not in any discussions.
He recalled that the cost of servicing Italian public debt is already equal to the country's entire spending on education - 65 billion euros ($74 billion) a year, or about 1,000 euros per citizen.
This would already be more than enough to cause deep concern as eurozone finance ministers meet for the first time since Brussels rejected Rome's 2019 budget.
The EU commissioner stressed that sanctions were always a "failure" and suggested proceeding "step by step".
Dutch Finance Minister Wopke Hoekstra backed the budget supervision process but he would not speculate about what Italy might do or what response might be needed if it refuses to submit a new plan.
In a statement, eurozone ministers gave their firm backing to the European Commission and called on Italy and Brussels "to engage in an open and constructive dialogue".
Rome remains committed to reduce its debt ratio and hopes to reach a compromise with the European Commission, Finance Minister Giovanni Tria told his peers at the Eurogroup, according to an Italian government official.
"On Nov. 19 we'll hold an extraordinary Eurogroup here in Brussels and this meeting will be mostly dedicated to euro-area reform", Eurogroup President Mario Centeno tells reporters after the meeting.
In a paper prepared for the meeting on Monday, 10 European Union finance ministers wrote they wanted any unsustainable public debt in the euro zone to undergo restructuring, with losses imposed on the private sector, before a public bailout is organised.