Public finance policy document forecasts growth at 1% in 2026 and debt at 138.6% in 2027
Quick Look
- The Public Finance Policy Document indicates growth is forecast at 1% in 2026, slowing to 0.8% thereafter, with public debt rising to 138.6% in 2027 before starting to decline.
- The deficit should fall below 3% of GDP in 2026 thanks to the deviation allowed for defense and energy, allowing Italy to exit the EU infringement procedure.
- Among the measures under study: extension of the cut in the second Irpef rate up to 60,000 euros, flat tax at 5% for salary increases for young people, possible confirmation of the home bonus at 50-65% and partial use of the national safeguard clause for 28 billion allocated to defense and energy in 2027-2028.
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Why It Matters
The Public Finance Policy Document (DPFP) constitutes the macroeconomic framework within which the government will design the financial maneuver, based on the numbers presented in the press conference after the Council of Ministers.
Growth rising to around 1% in 2026 and then slowing to 0.8%, debt rising to a peak of 138.6% in 2027 and then resuming a downward trajectory. With a deficit that looks towards a future exit from the EU infringement procedure. Because it is expected to be below 3% of GDP in 2026 and, in European counts, it would be deducted by the 0.6% deviation allowed for defense and energy expenditure for 2027 and 2028: if the real deficit is above 3% for both years, the one valid for EU counts is 2.8 and 2.7% respectively.
These are the main quantities of the public finance policy document (DPFP), the macroeconomic framework within which the government will design the maneuver, based on the numbers indicated in the press conference after the Council of Ministers.
Among the main measures under study is the extension of the cut in the second Irpef rate for incomes up to 60,000 euros. The 'flat tax' of 5% for salary increases for young people, with the hypothesis of flat tax, with some limitations, for shops. Confirmation of the 50% home bonus for first homes is also possible, with the possibility of rising to 65%. And then the defense and energy chapter: the majority reached an agreement on a partial use of the national safeguard clause for a total of 28 billion dedicated to the two spending chapters, rather than the 36 assumed. The spending commitment for the extradeficit is divided between seven billion for each of the two items in both 2027 and 2028.
Open Questions
- What will be the concrete effects of the proposed fiscal measures on employment and consumption?
- How will the use of the national escape clause for defense and energy be financed?
- What are the growth prospects beyond 2028 according to government projections?
