Italy Promoted by the EU on Public Accounts: a Credible Path Towards Fiscal Consolidation

The European Commission has given the green light to Italy’s plan for the consolidation of public accounts, recognizing the country as a positive example within the new Stability Pact.

This important result represents a significant step forward for Italy, which has seen both the draft of the economic manoeuvre for 2025 and the multi-year spending plan approved with an extension of the adjustment path to seven years. A result that, as underlined by the EU Commissioner for Economy Paolo Gentiloni, combines fiscal seriousness and support for public investments.

A credible fiscal plan

According to the Commission, the Italian Stability and Budget Program (SBP) meets the requirements of the new Stability Pact, defining a credible fiscal path aligned with European recommendations. This positive assessment is based on months of negotiations between Rome and Brussels, during which the Italian government worked to ensure that its proposals respected the required spending limits. The Italian planning document was recognized as “in line” with EU guidelines, marking an improvement compared to the previous year, when the DPB was rated “not fully in line”. This success contrasts with the difficulties encountered by other Member States notoriously strict in the control of public accounts. Countries such as the Netherlands and Finland saw their multi-year plans rejected, while Germany received a partially negative rating, a sign of a renewed EU focus on the balance between fiscal rigour and investments needed for growth. The Minister of Economy, Giancarlo Giorgetti, welcomed the response, underlining that this success is the fruit of an economic policy based on seriousness and sobriety. Italy faces a complex challenge: reducing public debt without compromising economic growth. In this context, the Italian plan stands out for an approach that favours strategic investments, without sacrificing fiscal stability. The plan includes an increase in public investment, which will rise from 3.5% of GDP in 2023 to 3.8% in 2024, demonstrating that it is possible to maintain a balance between fiscal discipline and economic development. This approach, highlighted by Gentiloni, represents a positive example of how fiscal consolidation can be pursued without penalizing the future of the country.

Objectives and recommendations

One of the main objectives set by Italy is the reduction of the deficit/GDP ratio below 3% by 2026, as foreseen by the European treaties. To achieve this goal, primary spending will have to grow moderately, respecting precise limits: +1.3% in 2025 and +1.6% in 2026. This path, combined with a cumulative trend in primary spending of -0.7% in 2025 and +0.9% in 2026, aims to consolidate public accounts in a sustainable way.

The Commission has recommended that Italy respect the spending path set out in the plan and implement key reforms and investments to support growth and ensure the success of the multiannual plan. These interventions must be completed on time, and first qualitative feedback will arrive as early as December, with the new Alert Mechanism for macroeconomic imbalances. The EU’s positive assessment represents not only recognition of the work done by the Italian government, but also a sign of confidence in the country’s future. The ability to combine fiscal discipline, structural reforms and public investments is seen as a reference model in the EU.

The European context, marked by geopolitical uncertainty and global economic challenges, however, requires a constant capacity for adaptation. As highlighted by Gentiloni, the European Union must remain agile and ready to respond to unexpected shocks, while strengthening its competitiveness and economic security. The approval of the Italian plan marks an important step for the country and shows that it is possible to combine fiscal stability and economic growth. Italy, while aware of the challenges that await it, presents itself as a credible and determined partner within the European Union. A result that, with the right mix of rigor and strategic vision, could represent a turning point for the management of public accounts in the long term.

Alessandro Fiorentino