The European Commission has suspended the infringement procedure for Italy’s excessive deficit following the analysis of the Draft Budgetary Plan, which contains the data on which the Budget is based. The EU has therefore certified our country’s return within the spending parameters, but has not yet completely removed the expenditure reduction path imposed since last year.
In fact, the procedure was not cancelled, but only suspended pending a new analysis. When the official data are processed, probably at the beginning of spring 2026, the European Commission will analyze the Italian position again to assess whether the reduction in the deficit/GDP ratio was actually structural.
The EU suspends the excessive deficit procedure for Italy
With the confirmation of the numbers presented by the Government in the Budget Plan, the EU is promoting, at least for now, the situation of Italian public finances. Our country entered the infringement procedure for excessive deficit last year, after the European parameters were first suspended due to the pandemic and then rethought.
The Government’s calculations are therefore correct. Italy’s deficit/GDP ratio will fall within 3% this year, ahead of forecasts. As anticipated, however, the procedure is only suspended, not completely removed. This is because the data in the Public Finance Policy Document are only forecasts, albeit very precise, and will have to be confirmed by real data.
In the spring of 2026, when the final data on the 2025 deficit will be available, the European Commission will complete a second analysis which will have to certify whether the deficit has actually fallen in a structural manner below the threshold considered sustainable by the EU.
The numbers that promoted the Maneuver
The deficit/GDP ratio is the main measure of public spending in a year, but it is not the only one. In fact, the EU has also analyzed the so-called net spending, i.e. public spending from which some parameters considered irrelevant to understanding the fiscal behavior of a government are removed, such as:
- debt interest expense;
- spending on cyclical unemployment benefits;
- items financed entirely by the EU.
Also in this parameter Italy proved to be more virtuous than expected. In 2025, net spending will be 1.2%, just below the ceiling indicated by the European Council of 1.3%. An increase in this item is expected in 2026, up to 1.5%, but the limits will also increase, reaching 1.6%. The data is also positive in cumulative terms. From 2023 to 2026, Italian net spending will grow by 0.5% out of a maximum allowed of 0.9%.
How other European countries are doing
The European Commission also evaluated the performance of other European countries, regarding their debt situation. Like Italy, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Latvia, Luxembourg, Portugal and Slovakia were also promoted. However, the balance sheets of:
- Croatia;
- Lithuania;
- Slovenia.
All the other countries involved in infringement procedures for excessive deficit obtained the same treatment as Italy and therefore saw the measures suspended. These are Austria, Belgium, France, Hungary, Malta, Poland, Romania and Slovakia.
