Italy’s public finances have reemerged as part of the political debate following the publication of the European Commission’s Spring Forecasts where the Italian 2019 deficit is projected to reach 3.5% of GDP, a significant deviation from the Italian government forecast of 2.4%.

While the Italian economy appears to be rebounding from its current recession, according to the latest growth data, the projected deficit surpasses the 2.04% limit by the European Commission to retain Italy’s debt-to-GDP ratio in a viable trajectory and even the 3% ceiling set by the fiscal compact.

The eurozone’s third largest economy is projected to be the slowest in terms of growth in the 19-member group of nations that use the single currency with merely 0.1% GDP growth in 2019. According to the European Commission, the Italian debt-to-GDP ratio will hit 133% this year and rise to 135% in 2020, which is second only to Greece.

Ahead of European Elections, the European Commission backed down from an initial decision to initiate the sanctions procedure eight months ago, despite Italy’s commitment to a guaranteed citizens’ income policy threatening to undermine Italy’s 2019 budget.

Italy’s Prime Minister Giuseppe Conte challenged the European Commission’s forecast as “ungenerous” accusing Brussels of showing a “prejudiced attitude” the Italian news agency Ansa reports.

The most vocal critic of the perceived Italian appeasement has been the Dutch government who have demanded from the Commission that it explain the rationale behind holding back on punitive actions against Rome for Italy’s budget.

“Transparency is something our people expect. The Dutch expect it from their parliament and parliament expects this from its government, and rightly so,” said The Netherlands’ Finance Minister Wopke Hoekstra in December 2018, adding that Italy’s draft budget was damaging Dutch voters’ trust in the EU.

The Netherlands laid out a broader criticism of EU economic policy with Hoekstra telling the Financial Times that the EU is failing to attract economically strong countries – like Norway, Switzerland, and recently the UK – while countries like Denmark and Sweden are reluctant to buy into the monetary union project.

“If you lack the ability to attract and you lose the UK, then it’s time to look in the mirror,” Hoekstra said, warning that the EU is risking “implosion” as “part of the population, mainly in northwestern Europe, wants to leave.”

In April, Hoekstra warned the Eurogroup that The Netherlands would opt out of French President Emmanuel Macron’s plan for a eurozone budget. The budget, which has become a small fund, was rejected by The Netherlands unless national capitals retain a veto over spending decisions. Similar scepticism has been expressed in Germany, Austria and Finland.