Italy's budget has been rejected by the European Commission for its egregious spending proposals.
Italy’s 2019 Budget proposed increased spending, despite the country's high level of debt.
The debt of the third-biggest economy in the EU currently stands at 130 per cent of GDP – more than twice the EU limit of 60 per cent, and second only to Greece.
"Today for the first time the commission is obliged to request a euro area country to revise its draft budgetary plan, but we see no alternative,” said EU Vice-President Valdis Dombrovskis.
Italy has been informed that it must draw up a new budget within three weeks, according to Italian news agency AGI.
Brussels and Italy's coalition government have been caught up in a long dispute over the proposed Budget.
Italy defended its plans, saying hard decisions needed to be taken to encourage growth.
In a letter to the Commission, Italy’s finance minister Giovanni Tria said: “The Italian government is aware its budget plans aren’t in line with the EU’s Stability and Growth Pact.”
“It was a difficult but necessary decision to make in the light of the persistent delay to return to the 2008 crisis and the dramatic conditions the less advantage find themselves in.
The minister explained the government believes the daring economic move will pay out with “investments returning to Italy and the GDP growing again.”
However, Brussels warned that such a high amount of spending for a country whose economy is already struggling was a bad idea.