Public accounts: Italy gets EU green light on budget law and debt reduction plan

Brussels – Public accounts and reforms: so far, so good, let’s keep moving forward. Good intentions and strategies now need to be respected and implemented. The European Commission praises Italy and its government for their ability to put together a budget law for 2025 “in line” with common recommendations and rules and a “credible” and “sustainable” debt repayment plan. As part of the European semester, the economic policy coordination cycle, the EU executive is praising Italy for a reform agenda that is considered credible. The real challenge will be not to leave it on paper. Meanwhile, however, Giorgia Meloni and her majority record a political success.

The budget law: good and even better

The first piece of good news for the Meloni government is that the budget law for 2025 is on track. It turns out to be “in line with the recommendations” agreed upon at the European level: no increase in government spending but no stifling of growth. In the specific case of Italy, precisely this was what was expected:  state spending “within set ceilings,” with a path maintained at prudent levels.

The EU’s green light for Italy’s budget law is even more significant since few budget laws comply with commitments and rules. Along with Italy, there is Greece, Cyprus, Latvia, Slovenia, Slovakia, Croatia, and France. The Commission rebuked Estonia, Finland, Germany, Ireland, and the Netherlands for spending too much, while it challenged Luxembourg, Malta, and Portugal for not eliminating outright expensive energy support measures. It also has doubts about Lithuania’s public spending.

Therefore, Italy is among the few eurozone member states to present to Brussels accounts that are in order (eight out of 20 overall). In light of the difficulties that European partners face, the approval for the government takes on a different meaning, strengthening the remarks of Economy Commissioner Paolo Gentiloni: “The draft budgets for 2025 show that, under the new rules, consolidation is not taking place at the expense of investment,” he said.

Well done on the national (seven-year) debt reduction plan

The European Commission also gave its blessing to the national debt reduction plan, as outlined in the new stability pact, which was reformed and approved (including by Italy). The plan developed by the ruling parties sets out a “credible” and “sustainable” adjustment path in the medium term, according to the conclusions of the European executive. Hence, the Commission chose to ask the Council to endorse Italy’s strategy, just as it has done with the other strategies considered valid. It has asked for corrections from the Netherlands while still evaluating Hungary’s plan.

However, the government will have to become a government of action since “We will continue to monitor progress in the context of the European semester,” the commissioner for an Economy that Works for People, Valdis Dombrovskis, warned. Therefore, reforms cannot remain on paper, and Italy remains under Brussels’ magnifying lens. Especially since Dombrovskis, unlike Gentiloni, will be in the second von der Leyen commission, close to being reappointed and expected to receive a vote of confidence, barring dramatic last-minute twists and turns.