Italy Cuts Defense Spending to Lower Public Debt
Prime Minister Giorgia Meloni is scaling back planned defense spending to bring Italy's budget deficit below the European Union's 3% ceiling by 2026.
Giorgia Meloni is revising the 2027 budget and updating economic forecasts to contain Italy's public debt, which is projected to peak at nearly 139% of GDP in 2026. As part of these fiscal adjustments, the Italian government is scaling back planned increases in defense spending.
To manage the deficit, Italy is reducing the defense component of its use of the European Union's national escape clause from 0.9% to 0.6% of GDP. The government will continue to fully utilize the 0.6% allowance for energy costs. These changes are intended to help the 2026 budget deficit fall to 2.9% of GDP, marking the first time the figure has dropped below the EU's 3% ceiling since 2019.
These adjustments result in approximately 14 billion euros in extra spending annually for 2027 and 2028. The government has also raised this year's growth estimate to nearly 1% from 0.6%. These measures aim to ensure Italy's exit from an EU budget disciplinary procedure in mid-2027.
