>> The European Commission has rejected Italy's 2019 budget. Now Rome has three weeks to come up with a new plan. The decision came with some sharp words on Italy's 130% debt to GDP ratio.>> Breaking rules can appeal tempting as a first look, it can provide an illusion of breaking free.
>> The deal breaker for the EU is Rome's desire to breach EU spending limits with a 2.4% budget deficit. That flouts requirements the deficit should fall steadily towards a balanced budget. The commission's powers to police budgets were beefed up in 2013, but this is the first time it has asked a member state to submit a revised plan.
Reuters Crispian Balmer in Rome says the Italian government is standing firm>> I think it's probably fair to say that the government is more worried about the market reaction than about what is going on in Brussels. So if the markets went horribly wrong, I think the government would be forced to do something about this budget just because Brussels is complaining is not enough.
>> Coming into Wednesday that market reaction, so far pretty calm. Italian government bonds did sell off after the news of the EU rejection, but later it raised much of the losses. Now all eyes turns to Italian Prime Minister Giuseppe Conte as he meets Russian president Vladimir Putin in Moscow.
Italy a long standing critic of EU sanctions on Russia. Some wonder if Rome now plans to veto any new measures to give itself a budget bargaining chip in Brussels.