Italy to Maximize EU Budget Leeway for Energy Transition, Says Finance Minister

Italy’s Approach to EU Budget Flexibility for Energy and Defence

Government’s Use of EU Budget Escape Clause

ROME, Aug 5 (Reuters) – Italy intends to make full use of budget leeway allowed by a European Union “escape clause” from the bloc’s budget rules to fund measures aimed at softening energy costs, Economy Minister Giancarlo Giorgetti said on Wednesday.

“We will certainly be calling for the maximum amount envisaged for the energy spending,” Giorgetti told reporters in parliament.

Defence Spending Decisions

He also said Italy would not make full use of the budget leeway available to boost defence spending.

EU Commission Ruling on Defence Expenditure

Following Russia’s invasion of Ukraine, the European Commission ruled in March 2025 that EU member states could increase defence spending by up to 1.5% of gross domestic product per year for four years through 2028, without triggering disciplinary action over the increase in their budget deficits.

Italy’s Push for Energy Spending Flexibility

Italy pushed ​for the Commission to also similar fiscal leeway for spending aimed at cushioning the effects of more ​expensive energy.

Compromise on Energy Transition Funding
Allocation of Budget Leeway for Green Investments

As a compromise, the Commission decided to allow states to use 0.3% of GDP, out of the 1.5% already allowed for defence, to pay for investment that would help the transition from fossil fuels to green energy.

Eligible Measures for Energy Transition Support

Under Brussels’ terms, leeway of 0.3% of GDP per year in 2026, 2027 or 2028 – but not more than 0.6% over the three years – is granted to support measures such as the purchase of electric vehicles, changing heating systems from oil and gas to heat pumps, the installation of solar panels, or batteries.

Italy’s Planned Utilization of Budget Leeway

Giorgetti said on Wednesday that Italy would tap the clause to use the 0.6% of GDP leeway for energy spending, and an additional 0.9% for defence.

“On defence, we won’t reach the maximum and will

stop at 0.9% of GDP,” he said.

Reporting

(Reporting by Giuseppe Fonte, editing by Gavin Jones)