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Italy vows to keep the euro despite budget standoff with Brussels

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 Italy vows to keep the euro despite budget standoff with Brussels
The headquarters of the European Central Bank (ECB) in Frankfurt am Main, western Germany. Photo: Daniel ROLAND / AFP
13:43 CET+01:00
Once opposed to the eurozone, Deputy Prime Minister Luigi Di Maio 'guarantees' that Italy will be keeping the single currency.

Italy will not be leaving the eurozone, Deputy Prime Minister Luigi Di Maio insisted today, despite a standoff with Brussels over Rome's big-spending budget.

"As head of the Five Star Movement and deputy prime minister I guarantee it," Di Maio told journalists in Rome.

He was reiterating a statement made before the elections in March. The head of the one-time fervently eurosceptic Five Star Movement (M5S) had already changed his mind on the euro by then, saying it was "no longer time to leave."

He added."Times have changed, over the last year I have become convinced that Italy should remain in the eurozone."

Other key members of Italy's government are also opposed to the idea of leaving the single currency.

READ ALSO: Italy's new economy minister rules out euro exit

The populist government in Rome is under massive pressure since the European Commission last month rejected its 2019 budget, giving the ruling coalition in Rome until Tuesday to make changes.

Failing that, Brussels could put Italy into something called the "excess deficit procedure", a complicated process that could eventually lead to fines and provoke a strong market reaction.

The Italian government -- a coalition of the far-right League and M5S -- plans to run a public deficit of 2.4 percent of GDP, three times the target of its centre-left predecessor.

Scrutinising those plans, the European Commission yesterday said Italy's deficit will reach 2.9 percent of its Gross Domestic Product next year, much bigger than the 1.7 percent in its previous forecast.

"I sincerely want to explain (to the European Commission) that the figure of 2.4 percent is a maximum," Di Maio said, echoing Finance Minister Giovanni Tria, who said Brussels' forecast was a "technical failure". 

Italy's deputy Prime Minister Luigi Di Maio drinking coffee during a press conference in Rome this morning. Photo: Tiziana FABI / AFP

The anti-establishment Five Star Movement once promised voters a referendum on the euro.

Its coalition partner, the League, has also softened its stance on the single currency considerably.

Party leader Matteo Salvini said before elections that though joining the eurozone was a “mistake” Italy could now “no longer do without the euro”.

The two populist parties enjoyed a sudden rise power earlier this year, after riding a wave of popular anger. But voters chose populist parties like the M5S and the League because of concerns over immigration rather than any desire to leave Europe or the eurozone, surveys suggested.

While polls indicate that Italy is one of the most eurosceptic members of the EU, most moderate voters balk at the idea of leaving the single currency.

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