Budget, government approves 28-billion deviation for energy and defence

The Council of Ministers met on Friday, October 2, at Palazzo Chigi under the chairmanship of Giorgia Meloni. On a proposal by the Minister of Economy Giancarlo Giorgetti, the government approved the Public Finance Planning Document, the instrument that anticipates the contents of the budget law.

The most significant measure is the authorization of a budget deviation of 28 billion euros, intended to finance measures on two fronts: containing energy costs and defence spending. According to estimates reported by Radiocor sources, in 2026 the deficit-to-GDP ratio is expected to fall below the 3% threshold, while economic growth is forecast at 1%.

During the meeting, Meloni asked that part of the extra revenue generated by high prices be allocated to ease the impact of energy price increases on households and businesses. The issue has already been discussed by Giorgetti with his European counterparts, who reportedly expressed caution about the use of these budget margins. The Prime Minister summarized the framework within which the government is operating as follows: “With EU rules there is limited room to contain inflation.”

The budget deviation is a measure that the government activates when it deems it necessary to spend beyond the constraints ordinarily set, asking Parliament to authorize a deficit higher than the one planned. In this case, the figure of 28 billion will have to be reconciled with the deficit-reduction path that Italy is pursuing under European budget rules, the very rules that — according to what Meloni reported — limit the room for additional measures on energy prices.

The Public Finance Planning Document represents a preparatory step ahead of the actual budget law, which will have to translate into concrete rules the priorities indicated by the government: energy and defence, indeed, as priority spending items for next year. It remains to be seen in the coming weeks how these resources will actually be allocated between the two areas, and what the reaction of European institutions will be to the flexibility margins requested by Rome.

The deficit-to-GDP ratio figure below 3% forecast for 2026, if confirmed in the upcoming parliamentary passages, would mark a return within European reference parameters after the years of overshooting linked to the energy and pandemic crises.