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1h ago

Italy Approves Fiscal Plan Targeting 3% Deficit in 2025

Tight EU spending rules leave only limited room for targeted relief, with an early exit from the deficit procedure now within reach.

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Overview

  • The Council of Ministers cleared the new DPFP, projecting 0.5% GDP growth in 2025, and sent it to Brussels and Parliament for a 9 October debate.
  • The framework confirms a deficit path of 2.8% in 2026, 2.6% in 2027 and 2.3% in 2028, and notes limited fiscal space, with press reports of an €8 billion margin unconfirmed and largely unusable under EU rules.
  • The 2026 budget will prioritize cutting the second IRPEF bracket to 33% for incomes between €28,000 and €50,000, with detailed measures to be filed by 20 October.
  • A scaled tax‑debt settlement is planned and the government aims to obtain a €2.5–3 billion contribution from banks through a negotiation that has not yet started.
  • Planned defence outlays would rise by 0.15% of GDP in 2026, 0.3% in 2027 and 0.5% in 2028, contingent on Italy exiting the excessive deficit procedure.