Rome, March 2 - Italy's budget shortfall for 2025 came in at 3.1% of gross domestic product, leaving it outside the European Union's 3% ceiling despite an improvement from 3.4% in 2024, the national statistics bureau ISTAT reported on Monday.
The slightly narrower deficit nevertheless missed the government's forecast of a 3.0% gap. Had the outturn matched Rome's projection, it could have paved the way for Italy to exit the EU's Excessive Deficit Procedure later this year - a departure that would have occurred a year earlier than planned and would have eased some of the fiscal constraints on spending as the government prepares for the 2027 election.
Prime Minister Giorgia Meloni had recently said she expected the 2025 deficit to come in "below 3%". The government continues to target a deficit of 2.8% of GDP for 2026.
Growth and revisions
ISTAT also reported that Italy's economy expanded by 0.5% in 2025, matching the government's most recent, downwardly revised forecast and broadly aligning with the majority of independent forecasters. The government projects growth of 0.7% for the current year, which, if realised, would mark a fourth consecutive year of sub-1% GDP growth despite a steady inflow of billions of euros from EU post-COVID-19 recovery funding.
The statistics office made small adjustments to prior years: it marginally raised the 2024 growth rate to 0.8% from 0.7%, and lowered the 2023 rate to 0.9% from 1.0%.
Public debt trajectory
On the liability side, Italy's public debt ratio increased to 137.1% of GDP in 2025, up from 134.7% the previous year. That level exceeded the government's 2025 target of 136.2% and sits just below the 137.4% projection the government has pencilled in for this year, ISTAT said.
Implications
The data leave Rome narrowly outside the EU threshold that would have enabled an earlier exit from the Excessive Deficit Procedure, maintaining the regulatory and fiscal limits that accompany that status. The combination of a deficit above 3%, rising public debt as a share of GDP, and persistently muted growth frames the fiscal backdrop the government will face as it approaches the next electoral cycle.