Italy's deficit hovers near 3%, keeping Meloni under EU watch

Summary

Italy's Documento di finanza pubblica (DFP) 2026, approved by the Council of Ministers, saw economy minister Giancarlo Giorgetti cut 2026 GDP growth to +0.6% and project a deficit around 2.9% (the broader measure ~3.1%), meaning Italy will not exit the EU excessive-deficit procedure a year early as hoped. Debt is projected at 138.6% of GDP in 2026. The squeeze constrains tax cuts and pension measures heading into the 2027 budget; Giorgia Meloni called the EU's continued "under observation" verdict "a swindle." It overlaps the NATO 5%-of-GDP defence-spending target, which the coalition floated revising — and feeds the calculation behind the Meloni weighs an early Italian election as soon as April 2027 talk.

By the numbers

• +0.6% — cut 2026 GDP growth forecast (from +0.7%).
• ~2.9% — 2026 deficit (broader measure ~3.1%).
• 138.6% — debt-to-GDP projected for 2026.
• ~2.8% / ~2.5% — deficit path for 2027 / 2028.

Why it matters

A deficit stuck near 3% keeps Italy inside the EU procedure and limits Meloni's room for crowd- pleasing tax and pension moves before any early vote — even as Brussels and NATO press for more defence spending. The fiscal box constrains both her budget and her electoral timing.

What to watch

• Whether the 2027 budget can fund tax cuts within the constraints.
• The coalition's stance on the NATO 5% target.
• Whether Italy exits the excessive-deficit procedure at all in 2026.