A new 2019 budget plan from the Italian government to reduce its deficit is still not enough to secure EU backing, Economic Affairs Commissioner Pierre Moscovici has said.

He said the plan to reduce the deficit to 2.04% of GDP was "a step in the right direction [but] we're still not quite there".

The European Commission in October rejected an even bigger-spending budget which would have left Italy with a deficit at 2.4% of GDP. Taken together with Italy's huge debt pile, it would have breached EU rules.

If an agreement is not reached, Rome could find itself the target of an EU excessive deficit procedure, which could ultimately lead to fines of up to 0.2% of GDP.