Italy is "cautiously optimistic" that a downward revision to its 2025 deficit is possible, the economy minister told parliament on Wednesday, reviving the prospect that Rome could leave a European Union Excessive Deficit Procedure this year if the improvement is judged to be durable.
Eurostat is scheduled to publish revised 2025 deficit figures for member states in September. Italy has for weeks expressed hope that the revision will move the country's 2025 deficit to just below 3% of gross domestic product from the 3.1% estimate first published by Rome's statistics bureau ISTAT in March.
Maintaining a deficit ratio below the EU's 3% threshold was the government's earlier target for 2025. Such a result would open the way for Italy to exit the Excessive Deficit Procedure, provided Brussels is satisfied that the improvement is persistent rather than temporary.
"With cautious optimism, we await the assessments of the relevant authorities," the minister said in parliament. He underscored that part of the negative hit to public finances counted in the 2025 deficit relates to an unexpected €8.4 billion in tax incentives for home renovations. The minister said some of those amounts could be trimmed because part of the spending appears linked to illicit activities.
"For these reasons, the [deficit] estimate may be lowered when updated figures are published on September 22," he said.
Under the multi-year budget framework the government set out in April, Italy aims for a deficit-to-GDP ratio of 2.9% this year and 2.8% in 2027. The same framework projects economic growth of 0.6% for both the current year and next year.
The minister also said parliament will soon provide guidance to the government on invoking the European Union's so-called escape clause from the bloc's budget rules. Rome has signalled that it plans to use the clause to support higher defence spending and to help offset energy costs. The timing of invoking that provision could influence the timing of any exit from the Excessive Deficit Procedure.
Finally, the minister indicated that the available information to date has not changed the economic outlook presented in April and added that Rome could restore an excise duty cut on fuels if petrol and diesel prices remain elevated.
Contextual note: The statements and figures above reflect the government's current assessments and the minister's remarks to parliament. Eurostat's forthcoming revised data in September will determine whether the official EU deficit statistics for 2025 are adjusted.