EU's Moscovici says Italy's revised deficit goal good signal despite risks (UPDATE 1)

European Commissioner Pierre Moscovici welcomed on Wednesday Italy's plans to revise its public deficit-cutting plans but warned Rome was still at risk of breaking EU rules in 2019.

Italy's populist-led government said last week it planned to run a deficit of 2.4 per cent of gross domestic product (GDP) next year, tripling the previous government's target. It also said that the deficit would stay at that level through 2021.

After the announcement triggered a sell-off in Italian assets and EU criticism, Rome said on Wednesday it would cut its deficit from 2020.

"It's a good signal that the trajectory has been revised because it shows that the Italian authorities are hearing the concerns and remarks from their partners and the European Commission," Moscovici said on the sidelines of a conference in Paris.

Moscovici said, however, that the core element of Italy's public sector deficit risked not being in line with the terms of eurozone rules if the overall deficit being targetted in 2019 was 2.4 per cent of GDP as mentioned by Rome.

"The rules are there," he said. "If it (the overall deficit) is 2.4 per cent, it's possible that the structural deficit will not be within the bounds of the (EU) stability and growth pact".

Moscovici, whose portfolio at the EU executive is economic and financial affairs, said he would withhold judgment of the 2019 budget until it is formally presented in detail to the European Commission for review later this month.