ROME, March 2 (Reuters) – Italy’s budget deficit last year failed to fall inside the European Union’s ceiling as targeted by the government, data showed on Monday, casting a shadow over Rome’s hopes of an early exit from an EU disciplinary procedure.
2025 Deficit Performance
The 2025 fiscal deficit came in at 3.1% of gross domestic product (GDP), down from 3.4% in 2024 but just above the EU’s 3% limit, national statistics bureau ISTAT said.
Implications for EU Excessive Deficit Procedure
A 3.0% deficit, as forecast by Rome, could have paved the way for an exit from the EU’s Excessive Deficit Procedure later this year, a year ahead of schedule, removing some constraints on spending as Giorgia Meloni’s government prepares for a 2027 election.
As recently as last week Meloni said she expected a 2025 deficit “below 3%”.
Italy currently targets the 2026 deficit at 2.8% of GDP.
Economic Growth and Forecasts
The euro zone’s third largest economy grew by 0.5% in 2025, ISTAT also reported, matching the government’s most recent, downwardly revised target, and also broadly in line with most independent forecasters.
Growth Projections
The government has forecast growth of 0.7% this year, which would be a fourth consecutive year of sub-1% growth despite a steady inflow of billions of euros of EU-post-COVID 19 recovery funds.
ISTAT marginally revised up the 2024 growth rate to 0.8% from 0.7% but lowered the 2023 rate to 0.9% from 1%.
Public Debt Concerns
Italy’s public debt, proportionally the second-highest in the euro zone after Greece’s, missed the government’s target last year, ISTAT reported, rising to 137.1% of GDP from 134.7% the year before.
Debt Targets and Future Outlook
The government had targeted 136.2% for 2025 and has pencilled in 137.4% for this year.
Reporting Credits
(Reporting by Antonella Cinelli, editing by Gavin Jones)