Italy has narrowly missed the European Union’s 3% deficit threshold for 2025, a miss of barely 600 million euros that nonetheless blocks its early exit from the excessive deficit procedure and exposes the fragility of Rome’s fiscal narrative. The official deficit figure of 3.1% of GDP, confirmed by Istat and Eurostat, came as a surprise even within the government: technical staff at the finance ministry discovered only in March 2026 that an additional 8.4 billion euros in building bonus spending — a lingering legacy of the superbonus scheme — had materialised without warning. From Rome, ministers are divided.

Economy Minister Giancarlo Giorgetti, a fiscal hawk, insists the government will still exit the procedure by 2027 and has warned parliament that restraint must continue. But Prime Minister Giorgia Meloni, speaking at an informal EU summit in Cyprus, adopted a more combative tone. She signalled that Italy may seek a budget deviation or even threaten to breach the stability pact if Brussels refuses to carve out energy and defence spending from deficit calculations. “Ad oggi non stiamo escludendo niente,” she said, pointing to the geopolitical shock of the war in Iran and the partial closure of the Strait of Hormuz since late February as justification for greater flexibility.

Viewed from Brussels, however, such appeals meet scepticism. Italy’s debt, above 137% of GDP, is the second highest in the eurozone, and the OECD warned this week that even a modest growth forecast of 0.4% may be revised down. With spending pressures from defence and energy mounting and no primary surplus yet secured, the room for manoeuvre is shrinking.

Across the government, tensions are growing between those who want to prioritise household relief and those who argue that only continued discipline will keep the spread — now below 70 basis points — from widening again. Analysts in London note that Italy’s window of low borrowing costs may close quickly if markets sense that Rome is abandoning its consolidation path. The real test will come this autumn, when the European Commission assesses Italy’s structural budget plan.

If Meloni chooses confrontation, she will do so without the cushion of strong growth that her predecessors squandered in the years of cheap energy and benign markets. The tempest has arrived; Italy’s fiscal ark may not be seaworthy.