MILAN (AP) — The Latest on Italy's spat with the European Union over its budget (all times local):
2:25 p.m.
The head of one of Italy's two ruling parties says the government won't fall over a dispute on the budget draft, which would offer a tax amnesty to Italians with accounts abroad.
Luigi Di Maio, the head of the 5-Star Movement, said Friday that he was sure a solution would be found, adding "we will hardly let the government fall over an amnesty for whoever launders or self-launders money." Di Maio alleges that the draft budget contained unauthorized language extending a tax amnesty to Italians' assets abroad, a measure that the 5-Star Movement says would benefit organized crime or tax cheats hiding money abroad.
The League party contends the language had been approved by both parties. Premier Giuseppe Conte has called a Cabinet meeting for Saturday.
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12:00 p.m.
The European Union's presidency says Italy must change it draft budget because otherwise the country would only threaten its own financial health as well as that of its partners.
Prime Minister Sebastian Kurz of Austria, which holds the rotating EU presidency, said Friday that Italy reduce its spending plans because "we as the European Union are not prepared to take on this risk, these debts for Italy."
The EU's executive Commission, which must vet Italy's 2019 draft budget, has already warned that the nation's significantly higher deficit targets represent a deviation "unprecedented in the history" of EU budget rules.
Kurz said: "If one breaks these rules then this means that Italy is endangering itself but of course also is endangering others beyond that."
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11:55 a.m.
Italy's financial markets are shaken following the European Union's stinging rebuke of the new populist government's budget bill, which pushes the deficit far beyond previously agreed levels.
Italy's government borrowing rose, with the yield on the benchmark 10-year bond on Friday hitting its highest level since 2013. The increase suggests investors are more nervousness about the impending budget showdown with the EU.
Despite the strong language in a letter deeming the budget inadmissible, both the Italian premier and economic minister continued to voice optimism that they could win consent by illustrating their plans.
The European Commission's letter said the difference between the expected budget deficit and the one now foreseen was "unprecedented in the history" of EU budget rules, and that it means Italy would be unlikely to lower public debt as promised.
