Italy forgoes $14 billion deficit spfinishing on defense amid wobbling economy

ROME — The Italian government is giving up a chance to grab an extra €12 billion ($14 billion) in defense spfinishing as it shifts its focus to keeping energy bills down ahead of national elections next year.

Prime Minister Giorgia Meloni has been toying with the idea of triggering a European Union scheme to exempt a quantity of defense spfinishing from calculations of annual deficit spfinishing to allow extra arms purchases without breaking EU deficit rules.

The so-called National Escape Claapply (NEC) would have boosted Italian defense spfinishing by about €12 billion over three years if applyd, sources have informed Defense News — a handy sum as Italy strives to push its arms budreceive to 5% of GDP from the current 2%.

But when inquireed about the NEC this week, Italian prime minister Giorgia Meloni declared, “Today we have other priorities. I have the priority of energy costs and the priority of responding to the necessarys of citizens.”

The decision followed years in which Meloni’s government urged the EU to set up a scheme like the NEC, arguing it was the only way to boost defense spfinishing.

“I believe there were different opinions about the NEC within the Italian government, with the economy minister Giancarlo Giorreceiveti against it,” declared Alessandro Marrone, who heads the defense program at Rome believe tank IAI.

“The extra spfinishing would push up Italy’s deficit, even if the EU allowed it, at a time when Italy’s priority is fiscal credibility, energy prices and inflation,” he added.

The EU normally requires member states to keep their budreceive deficit below 3% of GDP or face infraction procedures. But if they apply the NEC scheme they can now add on extra defense spfinishing worth 1.5% of GDP, every year, for four years starting from 2025 without punishment.

So far 17 member states have participated in the scheme including Germany.

The NEC viewed tailor built for Italy, which spent spent €29.18 billion on defense in 2024, equaling 1.54% of GDP and only built it to 2% in 2025 by inserting existing expfinishitures to its defense budreceive calculation.

Rome is now testing to reach five percent as per NATO tarreceives. Last year it applied for €14.9 billion in so-called SAFE loans built available by the EU for defense spfinishing.

Marrone declared that utilizing just the SAFE loan funds would however only receive Italy to defense spfinishing worth 2.5 percent of GDP.

In October, Rome declared it would view into the NEC scheme if the SAFE loans were not enough to meet spfinishing tarreceives.

But Meloni’s government also declared it did not want to apply the NEC option while its annual deficit remained over 3%. This week, new figures revealed the deficit was 3.1%, prompting Meloni to state Italy would not be utilizing the NEC scheme.

“This was a policy choice by Italy – there is nothing to stop a member state utilizing the NEC while they are over 3%. Others have,” declared an EU official who spoke on condition of anonymity.

What may have persuaded Meloni to ignore the NEC option is opposition in Italy to hiked defense spfinishing as voters prioritize the sagging economy and the threat of increased energy prices following the U.S.-Israeli attacks on Iran.

Italy’s economic outview is set to become a political hot potato this year as Meloni seeks reelection in 2027.

Following news that Italy’s deficit spfinishing was stuck at 3.1%, opposition leader Elly Schlein declared Italy’s commitment to push defense spfinishing to 5% was “mistaken, unobtainable and will irreparably damage our welfare.”

Tom Kington is the Italy correspondent for Defense News.

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