Italy’s interest bill climbs €30 billion

Italy expects to pay €117.2 billion in interest on its public debt in 2029, up from €87.2 billion in 2025, a rise of €30 billion, according to Il Fatto Quotidiano's account of the fiscal plan the cabinet sent to Parliament on 2 October (Il Fatto Quotidiano). These are forecasts reported by a newspaper, and we have not checked them against the official table, so the decimals may shift. The direction is what counts. It sets the limits for the 2027 budget that Finance Minister Giancarlo Giorgetti must now write.

The plan is a framework: a multi-year forecast of revenue, spending and interest. A later budget law decides what is actually spent (AGI). When the cabinet approved it, Giorgetti presented it as caution in a harder environment (To Brief).

Why old debt makes the bill rise slowly and steadily

A country's interest bill follows the history of its debt more than today's markets. When investors demand higher yields (the return they require to buy a bond now), Italy's existing fixed-rate bonds keep paying the rates agreed when they were sold.

The higher cost arrives only when the Treasury replaces bonds that mature, or borrows to cover a new deficit. This is called refinancing. Italy's debt had an average remaining life of 7.9 years at the end of 2025, according to the Parliamentary Budget Office, Italy's independent fiscal watchdog (UPB). So each year, another slice of cheap old debt is swapped for new debt at whatever rate applies that year.

Those new rates are being pushed up by the whole eurozone, not by doubts about Italy in particular. A basis point is a hundredth of a percentage point. In its sixth Economic Bulletin of 2026, the ECB (the European Central Bank, which sets interest rates for the eurozone) attributed about 37 basis points of a roughly 45-basis-point rise in euro-area ten-year yields to changed expectations about its own future rates, while the gaps between countries' borrowing costs stayed broadly stable (ECB). For Italy, that means it pays more because borrowing got dearer for everyone, not because investors singled it out.

A falling debt ratio, a rising bill

Italy's debt is projected to peak near 138.5% of GDP (the value of everything the economy produces in a year) in 2027, then ease to about 136.6% by 2029 (Agenparl, Il Mattino). The ratio falls because the economy, measured in current euros before adjusting for inflation, grows faster than the debt.

A smaller ratio does not shrink what Italy owes bondholders. Interest is forecast to rise from 3.8% to 4.6% of GDP over the same years (Il Fatto Quotidiano). That is a growing share of national income that goes to lenders and cannot go to pensions, hospitals or schools.

What extra borrowing would add

Separately from the framework, the cabinet asked Parliament to let it borrow beyond the spending ceiling Italy agreed with the EU under the bloc's fiscal rules. The extra room would cover energy and defence in 2027 and 2028, worth roughly €29 billion over the two years (AGI, Agenparl).

The published account does not say whether the interest forecast already includes this borrowing. Whatever is borrowed will carry the rates in force when those bonds are sold, and that interest will run for as long as the bonds are outstanding.

Who would benefit is not yet settled. Commission guidance steers the energy exemption toward building renovation and efficiency rather than bill rebates or fuel-tax cuts (European Commission). If Rome follows that steer, the money would mostly reach homeowners who can afford to renovate and the firms doing the work, more than renters. That is an inference from the guidance, not a decided allocation.

Approval needs a high bar. Article 81 of Italy's constitution requires an absolute majority in both chambers to borrow beyond plan in exceptional circumstances (Italian Senate). Parliament is expected to vote on 13 October (Corriere della Sera).

The published forecast shows Italy's annual interest bill rising every year to 2029 while its debt falls relative to the economy, and both trends follow from a refinancing calendar fixed long ago and rates set across the eurozone. Rome controls neither. The figures still need checking against the official table, and before MPs vote the Treasury owes them a plain answer: does its interest forecast already count the borrowing it is asking them to approve?