Public Finance Document, Giorgetti: Budgetary margins have narrowed. Meloni: The accounts are in order

Brussels – Giancarlo Giorgetti sets this out in black and white in the 2026 Public Finance Document: “Budgetary margins are particularly tight.” There are various reasons for this, primarily the international tensions that are dragging down the markets and driving up prices, but the Minister for the Economy assures us that, despite everything, “in the face of a shock of this magnitude, the government will continue to support household disposable incomes and business liquidity.” 

The target of bringing Italy’s deficit-to-GDP ratio back below 3 per cent will not be met this year, but it remains a priority. However, the path forward is hampered by everything that is happening in the world, particularly in the Middle East, where “it is unclear how long the current conflict will last, and in particular how long the Strait of Hormuz will remain totally or partially closed,” writes the head of the Ministry of Economy and Finance. 

Hence, it is difficult to make predictions. If anything, we are proceeding by process of elimination, although, under the current circumstances, “we are not ruling anything out,” Giorgia Meloni admits on her arrival in Cyprus for the EU Summit. The Prime Minister is not ruling out a budget deviation from the list of possible solutions, but first “we must see what rules we have and then, in the coming weeks, decide how to proceed at the national level.” Certainly, “our priority is to provide answers, but we would prefer to do so within a… comfortable framework.” 

Meloni is not even accepting the accusations from those, such as the opposition, who blame the government for failing to meet the 3 per cent target, partly due to misguided economic policy choices that have thrown the accounts into disarray to a greater extent than is described by the Ministry of Economy and Finance and the Prime Minister’s Office. She dismisses this accusation out of hand: “I don’t think it’s fair to say that. The accounts are in very good order. When we took office, we had a deficit of 8.1 per cent; today it stands at 3.1 per cent.” 

If anything, it is the backlogs from the Superbonus scheme that are weighing heavily—Giorgetti estimated these at 40 billion last year, plus a further 20 billion. Now energy bills are likely to take their toll, which is why the Prime Minister is calling on the EU to take action to prevent the situation from worsening: “If we do not respond to these proposals in time, we risk suffering serious consequences.” The Italian government, together with other European partners, is calling for the suspension of the Stability Pact’s constraints and a halt to the ETS to give families and businesses some breathing space. 

Brussels, on the other hand, has responded by relaxing the rules on state aid. That’s good, but not great news for Meloni: “Flexibility is fine; it’s reasonable and fair, but we know that fiscal space isn’t the same for everyone, so we need to consider a model where these expenses aren’t counted either, just as we do with the SAFE mechanism for defence spending.” 

Another warning has been sounded by the Parliamentary Budget Office, which endorses the general outlook set out in the Draft Budget Law but warns of forecast volatility. This is because “the international scenario is exposed to very significant risks and the forecasts could be revised, even substantially, within a short period of time.” Meanwhile, the OECD describes Italy’s GDP as “resilient”, but in the long term reforms are needed to boost growth and achieve a substantial reduction in public debt. This is because “following the 0.5 per cent GDP growth recorded in 2025, growth in Italy is expected to slow slightly and fall to 0.4 per cent in 2026 due to the drag exerted by rising energy prices caused by the conflict in the Middle East, before rising again to 0.6 per cent in 2027.” However, the warning is that “uncertainty remains high.”