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To: Johnny Canuck who wrote (66360)	10/3/2025 1:55:05 AM
From: Johnny Canuck	Respond to of 67677

Italy’s deficit will fall to 3% this year, predicts government Giorgia Meloni’s administration would hit EU target a year earlier than anticipated due to bumper tax revenues In its projections on Thursday, Giorgia Meloni’s government forecast that the Italian economy will grow just 0.5% this year © EPA/Shutterstock Italy’s deficit will fall to 3% this year, predicts government on x (opens in a new window) Italy’s deficit will fall to 3% this year, predicts government on facebook (opens in a new window) Italy’s deficit will fall to 3% this year, predicts government on linkedin (opens in a new window) Share Save Pro Features Configuration current progress 100% Amy Kazmin in Rome Published2 hours ago 5Print this page Prime Minister Giorgia Meloni’s government expects Italy’s public deficit to fall to 3 per cent of GDP this year due to stronger than expected tax revenues, potentially allowing Rome to exit the EU’s excessive deficit procedure a year earlier than anticipated. While finance minister Giancarlo Giorgetti had expressed hopes of such a performance in recent public comments, Rome has now officially estimated that its 2025 deficit will drop to 3 per cent, compared to the 3.3 per cent of GDP it had originally forecast. The latest projection was included in a public finance planning document that was submitted to the Italian parliament on Thursday night, as part of preparations for hammering out the details of next year’s budget. Italy’s tax revenues between January and July rose 5 per cent compared to the same period last year, bringing an additional €16bn into state coffers, a jump that economists say reflected robust job growth and inflationary pressures. However, the European Commission will not assess whether Italy remained within the EU’s 3 per cent deficit threshold until spring 2026, once actual full-year data is available. Italy entered the procedure in 2024, which carries an economic stigma and could eventually result in financial sanctions from the EU. If it does exit the excessive deficit procedure, the finance ministry said it would begin to draw on European funds — of up to €12bn by 2028 — for investment in defence. While the declining deficit is seen as cause for cheer, economic growth remains muted, despite the massive injection of European funds from the EU’s Covid-19 recovery programme, of which Italy is the largest single recipient. In its projections on Thursday, Meloni’s government estimated that the Italian economy will grow just 0.5 per cent this year, as exporters wrestle with the impact of US President Donald Trump’s tariff blitz. Economic momentum is expected to pick up slightly over the next few years, however, with the government projecting an expansion of GDP growth of 0.7 per cent in 2026, 0.8 per cent in 2027 and 0.9 per cent in 2028. Though Italy was once seen as Europe’s byword for fiscal profligacy, Meloni’s government has been lauded for its efforts at fiscal discipline, which has helped to sharply lower the spread between Italian and German debt — and eased Rome’s borrowing costs. However, Francesco Giavazzi, who served as economic adviser to former prime minister Mario Draghi, said Italy’s improved public finances had been enabled by inflationary pressures and came at the cost of the purchasing power of many households. Inflation, he said, had led to many Italians obtaining pay rises that in turn pushed them into higher tax brackets, resulting in what he called “tax bracket creep”. “The people are paying for this because they are paying more taxes,” Giavazzi said. “It’s a fiscal correction equivalent to one implemented by raising taxes, but it’s a hidden one because the people don’t see it. It’s not a law passed in parliament — inflation does the job for you.” With their higher nominal pay, many Italians have also lost access to various subsidies and benefits for the poor, further relieving pressure on the public coffers, but weighing on household incomes. “An increase in taxes doesn’t help growth so it’s not surprising that the growth is 0.5,” he said. In the upcoming budget, Meloni’s coalition government is expected to cut the tax rate for people on middle incomes who earn between €28,000 and €50,000 from the current rate of 35 per cent to 33 per cent. “We aim to increase families’ spending capacities, in order to bring more serenity to households and boost domestic consumption,” Marco Osnato, who belongs to Meloni’s Brothers of Italy party and chairs the parliament’s finance committee, told the Financial Times. Additional reporting by Paola Tamma in Brussels