The head of the Department of Economics and Statistics of the Bank of Italy Andrea Brandolini asked the Government, during a hearing on the Public finance policy documentto find certain coverage for the measures that the Executive wants to introduce within the Financial Maneuver.
Bank of Italy underlined that its forecasts, more than those of the Government, proved to be accurate, especially with regard to economic growth for 2025, which is very limited.
Finally, he asked the Executive not to approve transitional but only structural rules, in order to avoid unnecessary debt peaks in exchange for the creation of transitory internal demand.
The Bank of Italy is holding back the Government on the Budget
The first point highlighted by Brandolini in his hearing on the DPFP was the lack of data.
The document, which replaced the NaDef, does not contain enough data to deduce exactly what the Government intends to do with the Budget for 2026.
The head of the Department of Economics and Statistics of the Bank of Italy underlined:
The public finance policy document does not include sufficient information to make assessments on the individual measures of the next budget.
During his hearing, Brandolini however made it a point to remind the Government that the planned measures should have certain coverage.
A warning that adds to the forecasts of the Executive itself on the Budget, among the most modest in recent years, with a scope of only 16 billion euros, while those of previous years had repeatedly approached 30 billion.
Stop transitional measures
Brandolini’s harshest comment, however, is the one on transitional measures. The Bank of Italy has invited the Government to limit them as much as possible, if not avoid them entirely.
The Bank of Italy manager said during the hearing:
It would be appropriate to limit temporary spending increases or revenue reductions: they have only temporary effects on demand, increase the level of debt and are often difficult to remove.
Brandolini described a dynamic that in recent years has put the Meloni Government itself in difficulty. To avoid budgeting expenses for future maneuvers as well, rules with a one-year expiry date have often been introduced in the budget.
An example was the Irpef cut for the first bracket, introduced as an annual rule at the end of 2023 and then made structural with difficulty and with many changes in 2024.
Brandolini characterized these measures as “difficult to remove” because they are often rules that give citizens an economic advantage.
Expiring them without renewing them or making them structural means, in fact, increasing taxes or the retirement age, or removing bonuses from citizens. All politically very inconvenient operations.
Growth forecasts
Finally, Bank of Italy underlined how the growth forecasts of the Dpfp, slightly lower than the more optimistic ones of the Government, are in fact in line with those of the Bank of Italy itself.
The reason for the modest increase in GDP, only +0.5% in 2025, is mainly the weakness of foreign demand, a consequence of tariffs and international tensions.
Brandolini concluded:
The most recent information essentially confirms our June projections, which indicated modest growth both this year and in the coming years, mainly due to weak foreign demand and the persistence of high uncertainty.
