Italy's Strategic Shift: Navigating EU Rules to Boost Defense Spending

Italy plans to gradually increase its defense budget once it exits the EU's excessive deficit procedure, complying with NATO's spending targets. The nation aims to elevate its defense expenditure to meet NATO's GDP benchmarks, with assurances of a phased approach post-2026 from Economy Minister Giancarlo Giorgetti.

Italy is poised to gradually increase its defense budget as soon as it emerges from the European Union's excessive deficit procedure. The country's Defense Minister has confirmed this strategic move, aligning Italy with NATO's heightened spending targets that are putting pressure across the continent.

This year, NATO's members committed to the U.S. demand of raising their annual defense budgets to 5% of GDP. For Italy, which is set to spend only 2% of its GDP on defense this year, the challenge is daunting. In response to Russia's aggressive actions in Ukraine, European countries have pledged to devote 3.5% of GDP to core defense initiatives, including troops and weapons, alongside an additional 1.5% for broader defense-related strategies.

According to Defense Minister Guido Crosetto, an average increase of 0.15-0.2% of GDP per year until 2035 is necessary. The gradual and flexible plan seeks to balance macroeconomic indicators with budget sustainability. Exit from the excessive deficit procedure is key, with Prime Minister Giorgia Meloni's government targeting a premature exit by mid-2026, opening the door for further spending growth.

(With inputs from agencies.)