The President of the European Commission sought to defuse tension over the Italian budget deficit on Tuesday.

Following the formal submission of the Italian 2019 budget to Brussels, Jean-Claude Juncker avoided inflammatory statements and spoke about the significance of Italy for Europe.

 The European Union would not survive Italy exiting the bloc, Juncker said; he went on to categorically deny that he would not like to see Italy leaving the Eurozone.

“Europe needs Italy and Italy needs Europe,” Juncker told the Italian news agency ANSA.

The Italian government projects a 2019 budget deficit of 2,4%. That is below the 3% fiscal compact ceiling but three times bigger than agreed with the previous government.

Commenting explicitly on the Italian deficit, Juncker said that the Commission cannot afford to ignore the discrepancy. “If we accepted the slip, some European countries would cover us with insults and tirades with the accusation we are being too flexible with Italy.”

“I don’t want us to overdramatise this budget issue, but I want us to return to the application of the EU rules, not in a strict fashion, but in a fair and wise way,” Juncker told Reuters.

Meanwhile, addressing the parliament in Rome, the Italian Prime Minister Giuseppe Conte condemned austerity and made clear that his government would not back down.

“Austerity is a path that can no longer be followed,” Conte said, vowing to “explain” this position to Italy’s European partners.

The commission now has two weeks to review Italy’s 2019 budget. Returning the budget to Rome for review is an unprecedented but not completely unlikely step.