On May 29, the European Commission will cancel the excessive deficit procedure launched against Italy in 2009, even if its deficit has yet to be brought below 3 per cent of GDP.

Brussels chose to accept the government’s pledge to comply because “to reject Italy would have been politically wrong,” an insider source told La Stampa, adding that Rome was benefitting from “current mood of general flexibility that the EU is experiencing.”

The government can now use up to €12bn in national funds to stimulate growth and jobs, but it will have to satisfy the Commission’s demands for more flexibility in the labour market, less bureaucracy and a more dynamic attitude in its public sector.

Prime Minister Enrico Letta stressed that the good news would not eradicate concerns over the country’s dire financial situation, in which public debt is expected to hit 132.2 per cent of GDP in 2014.