After months embroiled in a high-profile diplomatic row, Italy has agreed a deal on its budget with the European Commission.
The Commission had demanded changes to Italy’s high-spending budget plans because of the country’s high debt.
Italy initially stood its ground, leading EU officials to threaten disciplinary action and potentially expensive fines.
But European officials said Wednesday’s agreement avoided such action.
Under the deal, Italy has agreed to lower its planned budget deficit – but not by as much as European officials had hoped.
Economic commissioner Pierre Moscovici, however, acknowledged it had been a difficult year for the Italian people, citing the collapse of the Genoa bridge in August and the widespread damage caused by recurrent storms.
“The agreement reached today shows unambiguously that the European Commission is not the enemy of the Italian people,” he said.
“We are not a machine made up of insensitive bureaucrats, imposing austerity and denying democracy. I hope that today we can move beyond such caricatures.
“I hope that today we can also put to rest any doubts over Italy’s place in Europe.”
Valdis Dombrovskis, the commission vice-president in charge of financial stability, said the agreed budget “still raises concern”.
But he said the deal meant disciplinary action could be avoided – “provided that the agreed measures are fully implemented”.