Italy to use EU budget leeway to fund energy-relief measures in 2027-2028

ROME, July 21 (Reuters) - Italy plans to use the European Union's so-called "escape clause" from the bloc's budget rules to fund measures aimed at softening energy costs in 2027 and 2028, a statement from Prime Minister Giorgia Meloni's office said on Tuesday.

In a meeting between Meloni and senior coalition figures, there was "broad agreement" on a proposal to use the EU's flexibility to help families and businesses cope with rising energy bills over the next two years, the statement said.

Following Russia's invasion of Ukraine, the European Commission ruled in March 2025 that all EU member states could increase defence spending by up to 1.5% of GDP per year for four years through 2028 without triggering disciplinary action.

Italy pushed ​strongly for the Commission to allow fiscal leeway for EU governments to spend on cushioning the effects of more ​expensive energy.

As a compromise, the Commission last month decided to allow EU countries to use 0.3% of GDP, out of the 1.5% of GDP of extra leeway already allowed for defence, to pay for investment that would help the transition from fossil fuels to green energy.

Meloni's plan to invoke the clause a year before a general election scheduled for 2027 suggests Italy is preparing to drop efforts to bring its budget deficit below the key 3% of GDP ceiling and exit the EU's ongoing excessive deficit procedure.

Under the latest multi-year budget framework unveiled in April, Italy had targeted a deficit-to-GDP ratio of 2.9% this year and 2.8% in 2027.

(Reporting by Giuseppe Fonte, editing by Gianluca Semeraro and Keith Weir)