The numbers and the update
Italy's statistics office, Istat, published fresh figures Tuesday in Rome that left the budget gap for last year at 3.1% and lifted GDP growth to 0.6% from 0.5%. The tweak to growth was not enough to pull the shortfall under the European Union's 3% threshold.
Why the EU step matters
At 3.1%, Italy's deficit is lower than several peers but still breaches the EU limit, so the country remains under the Excessive Deficit Procedure, the bloc's public oversight regime for overspenders. Under the EDP, Brussels tightens supervision and can levy fines if governments fail to hit targets negotiated with the European Commission.
Politics, markets and the next budget
For Prime Minister Giorgia Meloni, the confirmation lands as a blow while her government grapples with the Iran war and prepares for national elections in the coming year. Together with Finance Minister Giancarlo Giorgetti, she has worked to contain the shortfall while also pursuing additional funding for defense and energy, tax reductions, and support for households and businesses. Investors have so far liked the trajectory. The yield gap between Italy's 10-year debt and the equivalent German bond sits below 90 basis points, down from above 200 when Meloni took office in 2022.
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What officials are saying and what's next
"Unfortunately, Italy won't exit the Excessive Deficit Procedure ahead of schedule this year, as we had hoped," Giorgetti said in a statement, adding that "this may happen in 2027." He now turns to delivering the final budget of Meloni's premiership, due before mid-October so it can be sent to the EU and to Italy's parliament. Elsewhere in Europe, several countries are still offside, and France's deficit is above 5% with its own outlook suggesting it may not get back to 3% until 2029.
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