National escape clause will finance $7.2 billion in defense spending in 2027 and 2028
Quick Look
The Government approved the report on the gap which provides for the use of the national escape clause to finance defense expenditure amounting to 7.2 billion in 2027 and the same amount in 2028, also including current expenditure such as personnel costs, after the downward revision of the initial plans due to the 2025 deficit set at 3.1%.
AI-generated summary
Why It Matters
The Government approved the report on the gap which provides for the use of the national escape clause to finance defense spending, after having revised the initial plans downwards due to the 2025 deficit set at 3.1%, in line with the new rules of community fiscal governance on the net spending trajectory.
Having been scaled down compared to the hypotheses of August following the revision of the plans following the confirmation of the 2025 deficit at 3.1%, the chapter dedicated to defense in the safeguard clause of the Pact will still have to act across the board. And he will therefore also be called upon to deal with expenses already foreseen in the public budget: including those for personnel.
The indication is clear in the report on the deviation, approved by the Government on Thursday evening in the council of ministers which examined the new program of accounts.
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Not just investments
The interventions, it is written in the quick summary offered by the text which will have to be approved in both Chambers with the absolute majority of the members, will concern "the capital account component, aimed at the creation and refinancing of multi-year investment programmes". But they will not forget the "current component, with particular reference to personnel, operations and operational needs".
Forced by financial needs and political needs to be reduced to the same size envisaged for the extra trade deficit to be dedicated to energy, the part offered to defense by the safeguard clause will finance expenditure of 7.2 billion in 2027 and the same in 2028, losing another 7.2 billion in the last of the two years compared to the summer hypotheses.
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The account saver
However, it will be up to you to include in the derogation from the EU Pact a part of the expenses already taken into account with the maneuvers of recent years. Which, as the Public Finance Policy Document reminds us, alone "show a significant increase compared to 2024". And this increase, "separated from the indicator, would bring the growth rate of net spending back within the recommended limit".
The point is technical, but it has political relevance. Alongside the deficit that has agitated in recent weeks after the Istat data on the failure to reach 3% in 2025, the new community fiscal governance has built the parameter of the net spending trajectory, which requires each State to respect the annual and cumulative increase limits designed to guarantee the sustainability of the public debt. Next year, thanks to the wind blown by inflation in the sails of pensions and a single universal allowance, according to the Government's calculations, Italy would exceed the ceiling set in the 2024 Structural Budget Plan. Unless, indeed, a portion of these expenditures is transferred to the national safeguard clause, which excludes them from the calculations on the spending trajectory.
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What to Watch
AI outlook — possibilities, not facts
Parliament will approve the deviation report with the required absolute majority
Likely · Within weeks
Open Questions
- What will be the precise impact on Italy's long-term public finances?
- How will other EU member states react to Italy's use of the escape clause?
- What will be the political compensations required by the majority forces to approve the measure in Parliament?
