Italy’s defiant refusal to abide by European Union budget rules is creating a rift within the European Commission, the EU executive, that pits uncompromising hardliners against those who argue for keeping the door open to a deal with Rome in the coming months.

At the heart of the matter is Italy’s budget plan for 2019, which was rejected by the Commission last week. This is the first time such a decision has been taken against a euro member since the creation of the common currency 20 years ago.