Italy seeks €29 billion in borrowing room

Italy's government wants permission to borrow up to about €29 billion more than its agreed budget path allows over 2027 and 2028, for defence and energy projects (Teleborsa, ANSA). Nothing has been spent yet. Parliament and EU finance ministers must both agree, and even then Rome would borrow every euro and pay interest on it.

On 2 October the cabinet asked for room worth 0.3% of GDP (gross domestic product, the value of everything the economy produces in a year) for energy and another 0.3% for defence in each year, roughly €14 billion a year in total (AGI). Finance Minister Giancarlo Giorgetti had first had about €36 billion in mind (Teleborsa).

The whole reduction came from defence. Giorgetti had planned borrowing room of 0.6% of GDP for defence in 2028, and the request halves that to 0.3%, about €7 billion less (Primapagina News). He called the plan a prudent answer to a complex economic and international setting (AGI). No published document says whether coalition politics, borrowing costs or Brussels drove the choice. It follows Rome's August decision to ask for less than its full share of EU defence loans (To Brief).

What extra borrowing does to the debt

Italy's debt is measured as a share of GDP in current euros. The ratio therefore depends on how fast the economy grows in cash terms, including inflation, and also on interest costs and each year's deficit (the gap between spending and revenue). The government's own forecasts offer little help from real growth, the figure after inflation is stripped out: 1% in 2026 and 0.8% in 2027 (La Repubblica, ANSA).

With growth that slow, new borrowing is hard to outgrow. Press reports differ slightly on where debt peaks, and the official tables are not yet out, but one account puts it at 138.4% of GDP in 2027 (Sky TG24).

Who has to say yes

Italy's constitution requires an absolute majority in both chambers before the government can borrow beyond its normal targets in exceptional circumstances (Senato). Brussels decides separately. EU rules let a country temporarily exceed its agreed spending path, but only after EU finance ministers approve a recommendation from the European Commission (EUR-Lex).

That approval shapes how Italy is judged. The country is still in the EU's corrective process for governments running deficits above 3% of GDP, after a 2025 deficit of 3.1% (Pagella Politica). Giorgetti's own presentation put the 2027 deficit at 3.5% (Adnkronos).

He argues that once Brussels discounts the 0.6 points of permitted defence and energy spending, the deficit it counts falls below 3% (La Repubblica). That would change Italy's score under EU rules, not its accounts. The recorded deficit stays the same, and the borrowing and its interest still land on the Treasury.

Insulation, not this winter's bills

The energy half comes with tight limits. Commission guidance restricts it to resilience and transition spending, such as renovating buildings and improving efficiency. It rules out fuel-tax cuts, fixed prices and direct compensation for energy bills (Build Up).

The cabinet has not said who gets the money. Going by that guidance, the likeliest early beneficiaries are people who can carry out upgrades: property owners, the contractors they hire, and firms with cash to invest in equipment. Renters and households struggling with bills this winter would need separate help, funded under the ordinary rules.

The budget bill, which sets out the actual taxes and spending, is expected around 20 October (Corriere della Sera). It will show how Rome splits the energy room between homes, businesses and public buildings.

If Brussels agrees, Italy gets permission to spend, not money. Any insulation or new equipment it funds would be bought with borrowed euros, the interest would fall on Italian taxpayers, and nothing in this energy window can cut a household's bill this winter.