MNI: Italy To Seek Escape Clause Once Exits EDP- Officials

Italy will seek to activate the national escape clause from Europe’s fiscal rules in order to increase defence spending as soon as the country leaves the Excessive Deficit Procedure, which the European Commission is likely to recommend in the spring, Italian and EU sources told MNI.

The Italian government has been reluctant so far to confirm that it will activate the escape clause, and officials are keen to stress the government’s success in fiscal consolidation and containing spending with a view to bringing the deficit to 3% of GDP in the 2025 budget, allowing the country to exit the EDP.

When the country published its macroeconomic framework before the budget law, it included a net spending growth projection for 2026 of 1.7%, slightly above the 1.6% limit under the country's seven-year adjustment plan. But net spending is expected to grow by only 1.3% in 2027, below the 1.9% limit, and by 1.5% in 2028, below the plan's 1.7% target. (See MNI POLICY: Italy Mulls Fiscal Escape Clause, EDP A Constraint)

SPRING SEMESTER

Finance Minister Giancarlo Giorgetti is working to find ways to reduce 2026 net spending growth, Italian sources said.

“We don’t want to leave one EDP, activate the national escape clause and quickly re-enter a new one”, the source said.

Separately, an EU official confirmed that the European Commission is likely to recommend that Italy leave the EDP at the time of the Spring European Semester package, after it has confirmed the country’s fiscal deficit numbers for 2025. The departure from the EDP would then have to be confirmed by the European Council, which could take some months, after which the country could apply for the national escape clause by the summer, or as part of the EU’s draft budgetary plan process in the autumn.