BRUSSELS, Dec 18 (Reuters) - The European Commission and Italy continue to discuss Rome's draft budget for 2019 and the EU executive arm will decide what next steps to take at a meeting on Wednesday depending on the talks, a Commission spokeswoman said on Tuesday.

The EU Commission rejected Italy's draft budget in October saying its planned rise in borrowing and spending was breaking EU budget rules and took the first step towards opening a disciplinary procedure that could end in fines.

Italy has since proposed to reduce its headline deficit, but it was not clear if the reduction was enough to satisfy the Commission, which is also interested in cuts in the structural deficit, that excludes one off items and business cycle swings.

(Reporting By Jan Strupczewski) ((jan.strupczewski@thomsonreuters.com; +32 2 287 68 37; Reuters Messaging: jan.strupczewski.reuters.com@reuters.net))