What Happened The budget battle between Italy and the European Union is heating up, and the European Commission has decided to escalate its dispute with Italy over Rome's 2019 budget. On Nov. 21, the commission issued a report saying that Italy's fiscal plans — which include tax cuts and spending hikes — break EU rules and will not make the country's debt more sustainable. As a result, the commission suggested an Excessive Deficit Procedure (EDF), which could eventually lead to financial sanctions against Italy. Rome claims its budget will cause Italy's economy to grow by 1.5 percent next year while keeping the fiscal deficit at 2.4 percent of the country's gross domestic product, which is below the EU threshold of 3 percent. Moreover, Rome has argued that the country's strong growth will cause the country's debt — which currently stands above 130 percent of its GDP — to decrease.