Commission backs Italy's escape-clause request for defence and energy

The national escape clause is an exception in the EU's fiscal rules that stops certain spending from triggering disciplinary steps in the deficit calculation. According to Xinhua, Italy became the 19th member state to apply when it filed on 11 September, and a Commission spokesperson said the clause does not endanger the country's medium-term fiscal sustainability. The clause allows extra defence spending of up to 1.5% of GDP a year over 2025–2028. Within that ceiling, energy security spending can receive flexibility of 0.3% a year and 0.6% in total over 2026–2028.

Italy is not using the full room. Reuters reported on 2 October that the target for extra defence spending was cut from 0.9% to 0.6% of GDP, or about 14 billion euros a year in 2027 and 2028. The 0.6% allowed for energy, by contrast, will be used in full. The August plan had put the total extra deficit through 2028 at 1.5% of GDP, about 36 billion euros. According to ANSA, Italy, like other NATO allies, has committed to raising defence and security spending to 5% of GDP.

The constraint is the excessive deficit procedure. According to Reuters, the deficit will fall from 3.1% in 2025 to around 2.9% in 2026, dropping below the 3% ceiling for the first time since 2019. Because of the clause, however, it is expected to rise again from 2027. Rome aims to exit the procedure in mid-2027, and Finance Minister Giorgetti is negotiating with the Commission so that the extra deficit does not block that exit. Public debt is expected to peak at about 139% of GDP in 2026, overtaking Greece's and making Italy the most indebted country in the euro area.