Italy's finance minister projects 2026 budget deficit at 2.8% of GDP

The Italian government has announced its plan to reduce the budget deficit below the European Union's limit of 3% of GDP by next year. Finance Minister Giancarlo Giorgetti indicated that the deficit will be 3.3% this year before falling to 2.8% in 2026.

However, experts from Bloomberg express skepticism about Italy's ability to effectively manage its finances while simultaneously cutting taxes and increasing spending. Planned increases include additional investments in defense and support for businesses affected by US tariffs. The country is required to raise its military spending to 2% of GDP, as mandated by the European Commission.

Meanwhile, credit rating agencies are divided in their assessments of Italy's financial stability. Fitch Ratings has expressed confidence in the country’s capacity to address its fiscal challenges, and predicts a more rapid deficit reduction than what the government has outlined. On the other hand, the International Monetary Fund remains cautious, projecting that Italy's budget deficit will reach 3.5% by 2026.