The European Union must choose between letting Rome hike its budget deficit to cope with the costs of migrants and an earthquake, or siding with the “Hungarian way” of building barriers, Italy’s economy minister said.

The Italian government has been stepping up anti-Brussels rhetoric after announcing an expansionary 2017 budget plan on October 15th ahead of a referendum on constitutional reform that may decide prime minister Matteo Renzi’s political future.

"Europe must choose which side to take. They can accept the fact that our deficit goes up from 2 per cent to 2.3 per cent [of gross domestic product] to tackle the earthquake and the migrant emergencies," Pier Carlo Padoan told the newspaper la Repubblicain an interview on Sunday.

“Or they can choose the Hungarian way, which puts up walls against the migrants and must be rejected. That would be the beginning of the end.”

Reconstruction

The budget raised previously agreed targets for the budget deficit and the public debt, with Rome insisting it needs leeway to deal with the migrant crisis on its Mediterranean borders and reconstruction after the August earthquake.

The European Commission is considering sending Rome a letter warning against breaking the bloc’s budget rules, officials have said. Italian newspapers said the letter could arrive on Monday.

Fitch Ratings agency cut its outlook for Italy on Friday, saying weak growth, high debt and the uncertain outcome of the December 4th referendum posed risks to the euro zone’s third-largest economy. Fitch said Italy’s track record of “repeated delay and back-loading of fiscal consolidation reduces credibility.” – (Reuters)