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Italy to hike defence spending once out of EU deficit procedure, minister says
Published by Global Banking and Finance Review
Posted on November 12, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 12, 2025
2 min readLast updated: January 21, 2026
Italy plans to boost defence spending after exiting the EU deficit procedure, aligning with NATO targets by 2035.
ROME (Reuters) -Italy will gradually increase its defence budget once out of an European Union excessive deficit procedure, its defence minister said on Wednesday, as the country prepares to comply with higher NATO spending targets.
NATO members this year agreed to a U.S. demand to boost their annual defence budgets to 5% of gross domestic product (GDP), a challenge for highly indebted Italy which this year is projected to spend just 2% of GDP on defence.
Under pressure to boost European military capabilities in reaction to Russia's war on Ukraine, countries pledged to spend 3.5% of GDP on core defence, such as troops and weapons, and 1.5% on broader defence-related measures.
"This target implies an average increase of 0.15-0.2% of GDP per year until 2035, to be achieved gradually and flexibly, taking into account the macroeconomic framework and budget sustainability," Defence Minister Guido Crosetto told parliament.
"I have received assurances from Economy Minister (Giancarlo) Giorgetti that once we are out of the excessive deficit procedure, an increase of 0.15% will be made next year, followed by 0.15% in 2027 and 0.2% in the following year."
Italy was placed under the EU procedure in 2024, restricting its spending policies until it brought its deficit below 3% of GDP. Prime Minister Giorgia Meloni's government hopes to exit the procedure by mid-2026, one year ahead of schedule.
Once freed from the EU procedure, Italy could ask Brussels to activate a so-called "escape clause" allowing it to boost defence spending beyond the 3% deficit limit without triggering new disciplinary steps.
(Reporting by Angelo Amante, editing by Alvise Armellini and Crispian Balmer)
A deficit occurs when a country's expenditures exceed its revenues, leading to a shortfall that must be financed through borrowing or other means.
The North Atlantic Treaty Organization (NATO) is a military alliance of countries from North America and Europe, established for mutual defense against aggression.
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured by the rise in GDP.
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