FXstreet.com (Barcelona) - The European Commission urged Italy on Friday to step up debt reduction efforts in order to reach the deficit target, following the announcement that the Italian cabinet raised its debt and deficit forecasts for 2014.

PM Enrico Letta’s government released the updated economic forecasts today, according to which Italy's public deficit will come in at 2.5% of GDP in 2014, compared with the previous projection of 1.8%. The growth outlook for this year was cut from -1.3% to -1.7% and from +1.3% to 1% for 2014. The Italian PM stressed the need to stabilize the political situation in the country, in order to facilitate reaching these goals.

Meanwhile, Economy Minister Fabrizio Saccomanni said that he still expects the Italian economy to be flat in Q3, expand in Q4 and consolidate in 2014. He listed political instability, higher bond yields and lack of reforms as the main risks to growth.