Italy's populist government bowed to pressure from the European Union over its spending plans with an offer on Wednesday to taper budget deficit targets beyond 2020, as it looked to reassure nervous markets, reports AFP from Rome.

Rome sparked disquiet last week by unveiling a budget that set the public deficit at around 2.4 per cent of gross domestic product (GDP) for the next three years, earning a rebuke from the EU and stoking investor fears that Italy's mammoth debt could grow further.

Prime Minister Giuseppe Conte moved to row back slightly on Wednesday, saying the country was now eyeing deficits of 2.1 per cent in 2020 and 1.8 per cent in 2021.

He had earlier vowed to speed up Italy's efforts to reduce its public debt which is at a sky-high level of 131 per cent of GDP -- the eurozone's second biggest after Greece.