The 3.1% deficit-to-GDP ratio for 2025 certified by Istat keeps Italy above the European Union’s 3% threshold, pushing the prospect of exiting the excessive deficit procedure back to 2027. A tenth of a percentage point that carries weight in symbolic terms and in political communication, but which needs to be viewed as part of a broader trajectory: in 2022, the deficit stood at 8%.
The financial effects of the Superbonus are the main factor behind Italy’s failure to reach the 3% target, with costs in 2025 coming in around €8 billion higher than expected.
According to Carlo Stagnaro, Research and Studies Director at the Istituto Bruno Leoni, the figure should therefore be interpreted by looking at the substance of Italy’s public finances — which are in order — rather than focusing solely on the European threshold.
Q: The 3.1% figure certified by Istat keeps Italy above the 3% threshold. How should this figure be interpreted?
A: The first consideration is that exiting the European procedure would have been important, both politically and in practical terms. But the substantive point is another one: the deficit has been enormously reduced. In 2022, we were at around 8%; today, we are at 3.1%. That is a very significant reduction.
- From the standpoint of fiscal policy, therefore, that tenth of a percentage point does not change the substance of the effort that has been made to put the public finances in order. Over the past four years, the government has done a good job in terms of fiscal discipline.
Q: Does the failure to exit the procedure early therefore represent mainly a communications problem?
A: I would say it is mainly a defeat in terms of communication. The government’s original objective was to close the procedure in 2027. At a certain point, however, the government invested heavily in the possibility of bringing the exit forward.
- Failing to achieve that result inevitably becomes a communications own goal, because it had been turned into a political objective. But in terms of the substance of fiscal policy, it changes very little.
Q: How much does the legacy of the Superbonus weigh on this result?
A: It weighs very heavily. In 2025, Superbonus-related costs were around €8 billion higher than expected. If we had not had those billions to account for, the procedure would already have been closed. It is a factor that continues to affect the public finances years later.
- And there is one particularly significant aspect: after four years, we have still not been able to fully monitor the measure’s financial effects. A public policy of that magnitude would have required much more accurate forecasting. Instead, even today we are still dealing with significant deviations from the forecasts.
Q: Is the failure to meet the target therefore mainly attributable to that legacy?
A: Yes. The adjustment plan formally envisaged exiting the procedure next year, and that objective will reasonably be achieved. The problem is that the costs of the Superbonus have continued to affect the public finances well beyond the point at which the measure was introduced. From this perspective, the failure to meet the earlier target is primarily linked to that dynamic.
Q: How much does that 0.1% really matter to markets and international investors?
A: Much less than one might think. The difference between 3.0% and 3.1% carries significant symbolic weight because the European threshold is set at 3%, but to think that this tenth of a percentage point changes the direction of the government’s fiscal policy would be absurd.
- For international investors, the failure to close the procedure early does not substantially change the perception of Italy. Over the past four years, a considerable effort has been made to put the public finances on a healthier footing, and today the markets see a serious and reliable country.
Q: That is something that also appears to be confirmed by the performance of the spread.
A: The spread being at historic lows provides investors with a degree of reassurance. It is also something the government can point to politically when making the case for the work it has done on the public finances. Of course, this does not mean that the problems have been solved: debt remains high and fiscal discipline continues to be necessary.
Q: With the procedure still open, will the government have less room for manoeuvre in the next Budget Law?
A: The government will still have to bring the deficit below 3% over time. In substance, the room for manoeuvre will depend on two factors. On the one hand, there are the new possibilities for flexibility linked to defence and energy security; on the other, there is the ability to find resources within the budget by rationalising existing spending items, as well as through growth that may prove stronger than expected.
- There are also revenues that are performing slightly better than expected. At this point, therefore, the room for manoeuvre is not so different from what the government would have had if the excessive deficit procedure had already been closed.
Q: How important, then, is it to bring the deficit below 3% next year?
A: It is important above all because that was the objective formally set out in the adjustment plan. Reasonably, Italy will exit the procedure in 2027. Closing it earlier would certainly have been a major symbolic achievement, and that should not be denied. But failing to cross that threshold does not change the overall picture of the public finances.
Q: The Istat figures nevertheless show a sharp reduction in the deficit compared with previous years. Is that the trajectory we should be focusing on?
A: Absolutely. We must not lose sight of the trajectory. Moving from a deficit of close to 8% to 3.1% means having completed a very significant adjustment.
- We also need to look at the ability to meet forecasts: in 2025, against roughly €1 trillion in public expenditure, the overall deviation from the forecast was in the region of €1 billion. That figure needs to be put into context relative to the size of the budget, even though it still represents a forecasting error.
Q: So is the message coming from the public finances less negative than the failure to reach the 3% threshold might suggest?
A: We need to distinguish between the symbolic and the substantive levels. Symbolically, failing to reach 3% is a setback. In substantive terms, however, the picture shows an enormous reduction in the deficit and a path of fiscal consolidation that cannot be erased by 0.1%. The task now is to continue along this path, without using the result as a reason to loosen fiscal discipline.
