Nevertheless, Milan’s long-suffering stock market somewhat recovered from earlier losses after E.U. finance chief Pierre Moscovici stated that Italy’s financial situation presented no danger of contagion to member countries.

The European Union’s budget chief sought to ease tensions with Rome over Italy’s budget. Moscovici told reporters on Friday that European partners want to see Italy remain “firmly in the center of Europe,” and that Italians themselves consider the euro currency “very important.”

“We don’t want to have any type of fight, we are not interested in an escalation … market operators will be reassured by constructive dialogue,” he added.

However, Italy argued that the increased spending plan was necessary to bolster growth, which will eventually push down debt, and the higher deficit will subsequently fall as a result, according to the Associated Press. Other European Union members, though, have been more outspoken about the need for Italy to rein in its deficit that is up to 2.4%, or three times higher than promised by the previous Italian government.

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