Italy has agreed a deal on its budget with the European Commission, after spending several months entangled in a high-profile disagreement with Brussels.
The Commission had demanded changes to Italy's budget plans because of the country's high debt. While Italy initially stood its ground, it has now agreed to lower its planned budget deficit from 2.4 per cent to 2.04 per cent – a concession of over €10 bn.
While it is not as much of a reduction as European officials had hoped for, the compromise will save Italy from disciplinary action and potentially expensive fines.
Italian Prime Minister Giuseppe Conte said the compromise was a win for both sides.
"We can say in conscience that we have realised in full the wishes of our citizens, demonstrating determination in the economic politics of the government," he told the country's senate.
"We have achieved by means of a complete sense of responsibility, a shared solution, that is good for Italians and satisfactory to Europe."
Citing the collapse of the Genoa bridge in August and the widespread damage caused by violent storms, European economic commissioner Pierre Moscovici admitted it had been a difficult year for Italy.
"The agreement reached today shows unambiguously that the European Commission is not the enemy of the Italian people," he said. "We are not a machine made up of insensitive bureaucrats, imposing austerity and denying democracy. I hope that today we can move beyond such caricatures.
"I hope that today we can also put to rest any doubts over Italy's place in Europe."
The deal still needs to be approved by the Italian parliament. The European Commission said it would watch closely to ensure the agreement was adhered to, warning that it could resume its procedures if it is not.