Italy Pushes EU to Allow Energy Spending Flexibility Under Budget Rules
Italy Seeks Budget Leeway for Energy Spending Amid Economic Challenges
By Giuseppe Fonte
Calls for Equal Treatment in EU Budget Rules
ROME, April 27 (Reuters) - Italian Foreign Minister Antonio Tajani called on Monday for the European Commission to grant member states the same budget leeway to ease surging energy costs as is currently allowed for defence spending.
The move would potentially allow Italy to fund costly aid measures for firms and families worth almost 35 billion euros ($41.13 billion).
Italy's Budget Deficit Commitments and Flexibility
Deficit Reduction Pledges
Italy pledged this month to reduce its budget deficit to 2.9% of GDP in 2026, just inside the EU's 3% ceiling, from 3.1% last year, despite a darkening economic outlook due to the impact of the U.S.-Israeli conflict with Iran.
However, both Prime Minister Giorgia Meloni and Economy Minister Giancarlo Giorgetti said the government could renegotiate the deficit goals with European Union authorities at a later stage to respond to the energy crisis.
Comparisons with Defence Spending Flexibility
"Just as the EU has done with defence spending, the same can be done with energy spending," Tajani told reporters in Pistoia, central Italy.
Under a so-called 'national escape clause' (NEC), the European Union allows countries to exceed the bloc's deficit limits either to increase their defence spending, or to tackle exceptionally averse economic circumstances.
Details of the National Escape Clause
In the case of defence spending, the budget flexibility would be available for four years starting from 2025, with an increase in the deficit through 2028 that must not exceed 1.5% of national output per year.
It remains to be seen what response Brussels will give to Tajani's call for the same 1.5%-of-GDP leeway to be extended to energy-related spending.
Italy's Emergency Measures and Debt Outlook
Short-Term Energy Relief Actions
In response to the turmoil in the Middle East, Italy has spent around 1 billion euros to cut excise duties on fuels until May 1, but prices to consumers have changed little.
"These are emergency measures, short-term measures, rather than long-term ones that permanently increase Italy's debt," Tajani said.
Debt-to-GDP Projections
Italy is already set to replace Greece as the euro zone's most indebted country, with a debt-to-GDP ratio is by the government to peak at 138.6% of GDP by end-December, from 137.1% in 2025.
($1 = 0.8511 euros)
(Reporting by Giuseppe Fonte, editing by Gavin Jones)
