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Austria says EU must reject Italy's draft budget unless it's changed

Austrian Chancellor Sebastian Kurz attends a news conference after the ASEM leaders summit in Brussels, Belgium October 19, 2018. REUTERS/Francois Lenoir/File Photo

VIENNA (Reuters) - The European Commission must reject Italy’s draft 2019 budget unless changes are made to it, EU presidency holder Austria said on Monday.

The Commission has called the budget an unprecedented breach of the bloc’s fiscal rules and sent Rome a letter warning that it needs to be modified.

The draft aims to lift the deficit to 2.4 percent of economic output next year from 1.8 percent in 2018. Italy expects the Commission to ask it to revise it, a government source said on Sunday.

“If it is not amended, the European Commission must reject the budget,” Austrian Chancellor Sebastian Kurz said in a statement issued by Finance Minister Hartwig Loeger’s office.

The country holds the European Union’s rotating presidency until the end of this year.

“Austria is not prepared to stand up for the debts of other states while these states knowingly contribute to uncertainty in financial markets,” Kurz said. “Now the EU must prove that it has learned from the Greece crisis.”

Loeger, also quoted in the statement, said a breach of EU budget rules by Italy “would open the door for other countries (to do the same).”

Reporting by Francois Murphy; Editing by Raissa Kasolowsky and John Stonestreet