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Italy's League and 5-Star attack EU budget rules after vote

ROME (Reuters) - Italy’s far-right League party and the 5-Star Movement, which both performed strongly in this month’s inconclusive national election, attacked European Union budget rules on Tuesday, saying they must be overhauled.

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The March 4 election ended in gridlock, with the League becoming the biggest member of a right-wing coalition that took a combined 37 percent of the vote, and the anti-system 5-Star emerging as the largest party in parliament on 32 percent.

Neither of the two has enough seats to govern alone, but they would have a majority in both houses if they joined forces. Starting next month, the country’s president will begin to cajole rivals into finding common ground on which they could govern together.

Speaking at separate events, League leader Matteo Salvini and 5-Star’s Luigi Di Maio agreed that a budget deficit ceiling of 3 percent of economic output set under EU rules was hurting economic growth and should be changed.

“On the deficit, it seems that by now everyone agrees this parameter should be revised and replaced. Now we should see how,” Di Maio told foreign reporters in Rome.

Earlier in the day, at the European Parliament in Strasbourg, Salvini said the deficit limit was “one of those rules, written around a table, which we are happy to respect if they help people live better, but if in the name of those constraints we have to fire, close and destabilise, no”.

Though the League and 5-Star agree budget austerity should be scrapped, their two leaders adopted a different tone towards Brussels. Salvini denounced the European Union as “destroyers”, while Di Maio said he wanted constructive relations.

“As prime minister, my first trip would be to Brussels,” Di Maio said, adding that his group had no intention of quitting the euro currency and that he wanted nothing to do with “Europe’s extremist parties”.

The comment appeared to be directed against Salvini, who has aligned the League with France’s National Front of Marine Le Pen and the Dutch Freedom Party of Geert Wilders. Salvini also wants Italy to abandon the euro when it is politically feasible.

“I challenge anyone to say the 5-Star’s programme is an extremist programme,” Di Maio said, stressing that his overall goal would be to cut Italian debt by stimulating growth.

For his part, Salvini said he wanted a right-wing government, and he ruled out doing a deal with the centre-left Democratic Party (PD), the big loser in the election.

The PD has repeatedly said it does not want to ally itself with anyone and that it plans to go into opposition.

If the president fails to break the deadlock, he could try to persuade parties to back a non-political government with a limited mandate -- but Di Maio dismissed this option.

During the election campaign, all of Italy’s parties responded to rising dissatisfaction with the EU by promising to renegotiate treaties. However, the League was the only large party to say explicitly it was willing to leave the EU if fiscal and immigration rules were not re-written.

Reporting by Isla Binnie, Editing by David Stamp and Crispian Balmer