The European Commission, with the recommendation 212 of 3 June, addressed 6 requests for intervention to Italy for 2026 and 2027 as part of the spring package of the European Semester. Brussels confirms that the country is in a situation of macroeconomic imbalances linked to high public debt and low productivity growth. For this reason it dictates the reform agenda that the Government will have to translate into measures in the next 18 months.
The text now passes to the EU Council for formal approval, expected by July. From that moment the recommendations will enter the so-called “National Semester” phase: the Government and Parliament will have to translate them into the budget choices for 2027 and into the spending programs of European funds. The Commission will return to measure progress in the next spring package, in a year’s time.
Energy safeguard clause
On the sidelines of the publication of the Recommendations, the Commission also announced something new that weighs on the negotiations with Rome: the extension of the national safeguard clause, so far foreseen only for defense spending, also to investments to break away from dependence on fossil fuels.
What changes for Italy
Economy Commissioner Valdis Dombrovskis explained this, illustrating the proposal to the media:
We propose limited fiscal flexibility to address the challenges of the energy crisis. It consists in extending the scope of application of the National Defense Escape Clause, also including measures that accelerate the transition and exit from dependence on fossil fuels. Specifically, we propose the possibility of using up to 0.3% of GDP per year in 2026, 2027 and 2028 for measures that strengthen the structural resilience of the energy system, with a cumulative limit equal to 0.6% of GDP over the 3 years.
This is a safeguard clause designed to allow member countries to exceed the agreed spending limits without incurring infringement procedures, as long as the resources go to investments with defined time margins.
Giorgetti’s statements
Economy Minister Giancarlo Giorgetti is satisfied and, in a note from the Mef, claims Italy’s pressure on high energy costs:
I am satisfied because the Commission, unthinkable until a few months ago, has implemented our proposals, the result of long, serious and confidential work. When the limits of use are specified, the Mef reserves the right to make the most targeted proposals to protect businesses and families.
The picture: debt at 137.1% of GDP and growth at 0.5%
The Commission’s numbers show a country at reduced speed. The deficit fell from 3.4% of GDP in 2024 to 3.1% in 2025, and spring forecasts set it at 2.9% in both 2026 and 2027. The excessive deficit procedure, opened last year, remains pending based on the evaluation of effective action.
The real issue is public debt, which rose to 137.1% of GDP at the end of 2025 from 134.7% 12 months earlier. Brussels expects it to reach 138.5% in 2026 and 139.2% in 2027. The accounting tail of tax credits for building renovations, in particular the Superbonus, weighs heavily.
On the growth front, real GDP is expected to rise to +0.5% in 2026 and +0.6% in 2027, with inflation reaccelerating to 3.2% this year due to tensions in the Middle East. Defense spending is at 1.3% of GDP in 2025 and is forecast at 1.2% in 2026.
The 6 EU recommendations to Italy
Given the economic situation, the European Commission has made 6 different recommendations to Italy.
Public accounts, taxes and pensions
The first recommendation is the densest. Brussels is asking to respect the net spending path agreed in January 2025 (capped at +1.6% in 2026), after net spending growth in 2025 was 1.5%, above the recommended limit.
Defense spending must be strengthened “in a sustainable way” and any measures against high energy prices must remain temporary and targeted. According to Commission estimates, if the current interventions (cuts in excise duties on fuel and tax credits for road transport, fishing and agriculture) remained in force until the end of the year, they would cost 0.3% of GDP.
On the tax front, the Commission once again asks to shift the burden from work, therefore from Irpef, to other taxable bases and to cut tax expenditure and environmentally harmful subsidies. The fight against tax evasion must also be strengthened, with an explicit warning on measures such as amnesties and scrapping, defined as “counterproductive”. The commission also asks to update the cadastral values, which are still far from market prices.
Demographics and pensions chapter. With participation in supplementary pensions remaining at 38.3% of the workforce and the automatic link between retirement age and life expectancy not fully restored, Brussels is calling for a far-reaching reform to make the system sustainable.
Pnrr and cohesion
The second recommendation asks to guarantee the continuity of reforms and investments of the PNRR beyond the 2026 deadline and to accelerate cohesion programs, where Italy remains below the EU average for selected projects and payments.
Growth and investments
The third opens up the growth front: more research and development (public spending on R&D is estimated at 0.59% of GDP in 2025), procurement for innovation, valorisation of university research, mobilization of private savings towards the capital markets, venture capitalnew prices and a real industrial strategy that reduces the North-South gap.
The plan was rejected Made in Italy 2030: the 18 strategic sectors identified, according to the Commission, are too many and not prioritised.
PA, justice and competition
The fourth recommendation focuses on Public Administration, justice and competition.
41% of Italian businesses say they are dissatisfied with the PA, compared to an EU average of 24%. The times of first instance civil and administrative justice remain among the longest in Europe and in 2024 the disposition time (average disposal time of a judicial proceeding) in civil matters has even increased.
On the competition front, Brussels is asking to unblock tenders for concessions for energy distribution, railways, motorways, ports and healthcare.
Energy and climate
The fifth recommendation is on energy and climate. Italy has among the highest electricity prices in the EU due to its dependence on gas: the Commission asks to accelerate electrification, renewables and storage, complete the reform of permits (Consolidated Law), invest in the network and reduce system charges on bills.
The gaps in water and waste must be filled, especially in the South, and insurance coverage against climate risks must be strengthened, estimated at over 10 billion per year in investments needed until 2050.
Work, school, healthcare and poverty
The last recommendation is the broadest. Brussels is asking to reduce the segmentation of the labor market (in Italy fixed-term contracts are used more often than the EU average), strengthen collective bargaining, fight illegal work, support female participation (the distances between male and female employment are the highest in Europe), expand the offer of nursery schools and services for non-self-sufficiency.
As regards education, the Commission notes that in the South 46% of students do not achieve basic skills and the disadvantaged are 3 times more at risk of failure.
On healthcare, public waiting lists are growing and so is spending out of pocket (the costs borne by the citizen) remains above the EU average.
Today, absolute poverty affects 8.4% of Italian families and 13.8% of minors. The Inclusion Allowance, according to the Commission, is not an adequate tool to deal with the poverty emergency, nor is it able to help all the families affected.
