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EU asks Italy to cut back 2017 budget deficit: Treasury source

ROME (Reuters) - The European Commission has asked Italy to reduce its budget deficit this year, a Treasury source said on Tuesday, signaling that Brussels wanted Rome to reverse plans to overshoot previously agreed targets.

The Commission is seeking a 0.2 percentage point reduction in Italy’s structural deficit, a measure adjusted for swings in the business cycle, the source said.

A spokesman for the Commission said earlier on Tuesday that Brussels had sent a letter to Italy as part of “ongoing dialogue” over the country’s budget plan.

Italy’s government will decide in the coming days if, and how, to respond to the Commission request, the Treasury source said.

The government’s 2017 budget deficit goal is set at 2.3 percent of gross domestic product (GDP), up from 1.8 percent agreed previously with the European Commission.

EU rules require countries to cut their “structural” budget deficits by at least 0.5 percent of GDP every year until they reach balance or surplus. Italy’s budget raises the structural deficit by 0.6 points.

Reporting by Giuseppe Fonte, writing by Isla Binnie; Editing by Crispian Balmer