Italy plans €35 billion push for energy, defence under EU budget escape clause

Italy is preparing to significantly increase spending on energy security and defence after gaining additional fiscal flexibility from the European Union.

Finance Minister Giancarlo Giorgetti revealed the government's intentions during an address to parliament on August 5, as reported by Italy’s national news agency ANSA.

Prime Minister Giorgia Meloni’s government plans to allocate an additional 0.6% of cumulative GDP between 2026 and 2028 to strengthen energy security, while defence spending is set to rise by a further 0.9% of GDP over the same period.

According to figures reported by ANSA, the planned increases would amount to around €14 billion for energy security and between €21 billion and €22 billion for defence.

The additional spending is being made possible through the EU’s National Escape Clause, a mechanism that allows member states to temporarily deviate from fiscal rules in exceptional circumstances. The European Commission is expected to review national requests in September before presenting recommendations to EU finance ministers in October.

Italy’s push for greater defence spending flexibility could also pave the way for Rome to finally sign its delayed Security Action for Europe (SAFE) loan agreement.

“Measures eventually financed through SAFE loans can benefit from this flexibility,” Giorgetti said, suggesting that the additional fiscal room could help unlock the agreement, which has been stalled for several weeks amid tensions between the Italian government and the European Commission.

The SAFE programme was created to encourage joint European defence projects. Giorgetti said Italy had already launched shared defence initiatives and therefore had a responsibility to follow through on its commitments.

“SAFE was created to promote common defence systems. In the meantime, Italy has launched common defence programmes, and this has generated a sort of obligation, before being legal, a moral one,” he said.

The minister acknowledged that seeking exemptions from EU fiscal rules for defence spending was “certainly unpopular” but argued that Italy could not ignore its security obligations.

On energy policy, Giorgetti revealed that Rome would not receive EU approval for fossil fuel subsidies aimed at reducing the impact of the current energy crisis. Brussels has previously stressed that the flexibility offered under the National Escape Clause should be used to strengthen long-term resilience against energy shocks rather than provide temporary support measures.

By Nazrin Sadigova