It's October and like every year it's time for budget packageOn Thursday evening the Council of Ministers updated the estimates on GDP and the deficit and opened the dance in view of the Budget law to be concluded by the end of the year by approving the Public Finance Planning Document This replaces the Nadef and effectively preempts the budget, which will be the fourth under the Meloni government. The text will now be sent to Brussels and the Chambers, which have already scheduled its consideration in the Chamber for October 9th.
Among the cornerstones of the 2026 Budget Law, it should be noted that the Government provides for the deficit at 3% already this year, with GDP at 0,5% in 2025 and 0,7% in 2026, both at the trend and programmatic level, therefore without the push effect of the budget. An increase in GDP over the next three years, for a total of 11-12 billion, he was "booked" for the discussions Defense-related expenses, provided that the exit from the excessive deficit procedure is made official.
The cornerstones of the budget approved yesterday by the Council of Ministers
We will therefore start from “recomposition of the tax burden”, reducing the impact on income from work. A guarantee will be guaranteed “further refinancing of the national health fund”, and at the same time – the document pre-approved by the executive assures – measures will be introduced to "stimulate business investments and competitiveness". Also assured support for births and work-life balance. The coverage is still to be defined, but will come from "a combination of revenue measures and spending interventions."
“We confirm our line of firm and prudent responsibility,” he commented on the spur of the moment. the Minister of Economy Giancarlo Giorgetti, which recalls the "need to maintain public finances in compliance with the new European rules and the essential safeguards for the economic and social growth of workers and families."
As for the financing The Treasury has announced that the next budget will include "a combination of revenue measures and spending interventions," and that the latter take into account the "monitoring carried out and the adjustment of the related spending schedules."
Irpef Cut and "Response" to Confindustria
Specifically regarding the measures we start with the IRPEF cut, which will affect the middle class this year, with a two-point reduction in the second tax rate from 35% to 33% for incomes between 28 and 50 euros. New measures for families are also being studied, starting with a new intervention on tax deductions based on the family quotient. At Confindustria, who asks for "certainties", warning that the incentives are running out and that "a continuity of measures" is needed, replies the Deputy Minister of Economy Maurizio LeoThe goal, he assures, is to make the IRES premium a structural one, simplifying it. For healthcare, the goal is to raise an additional €2-3 billion, in addition to the €4 billion already earmarked in the last budget law.
Vanno resources for the Zes are also being renewed, that is, the Special Economic Zones, those identified by the Italian state where companies can benefit from special conditions and economic, financial, and administrative incentives, aimed at promoting investment and the development of entrepreneurial activities, especially in Southern Italy. The banksFinally, while awaiting the start of negotiations with the government on the potential contribution to the budget, they warn of the risks looming over 2026 and 2027: if there are knock-on effects on businesses, the ABI warns, "even the banks could and may suffer."
The (downward) GDP forecasts and the still prudent deficit
In the Dpfp tables growth is slightly revised downwards Compared to the Public Finance Document (PFF) estimates from six months ago, which set the GDP target at 0,6% this year and 0,8% next year, a positive signal comes from debt: the 2025 deficit, estimated at 3,3% in April, "currently stands at 3%" (the trend forecast by the PSB and reiterated in the PFF, 2,8% for 2026, 2,6% for 2027, and 2,3% for 2028, respecting the net expenditure path, was later confirmed). This marks a crucial threshold for hoping to exit the excessive deficit procedure a year early. In Brussels, no one is making any predictions: for the procedure to be concluded, the deficit "must be below 3%, I think 2,9% is a good figure," explains a senior European official, adding that in any case, the decision will be made in spring 2026, when the data will be definitive.
Defense spending increased by 11-12 billion by 2028
The Dpfp It also already takes into account a possible increase in GDP to be allocated to Defense, in the event that the exit from the procedure is made official: 0,15% in 2026, which would rise to 0,3% in 2027 and 0,5 in 2028, for a total of approximately 11-12 billion in the three-year period 2026-28Finally, the debt, which stands at values lower than the PSB (137,8% in 2026), begins to decrease as early as 2027 and reaches a value of 136,4 in 2028 "when the effect of the superbonus ceases".
Upb confirms its forecast: "The scenario is acceptable but carries significant risks."
The Parliamentary Budget Office (Upb) has confirmed last September 29th economic forecasts of the Public Finance Programming Document (DPFP) 2025, following discussions with the Ministry of Economy and Finance (MEF) over the past few weeks.
According to the Upb, the expected economic scenario is overall "acceptable", even if some estimates are slightly more optimistic compared to usual forecasts. The real GDP growth remains substantially in line with expectations, with a slight overshoot expected in 2027, while the estimates for 2025 coincide with those of the PBO. Over the period 2025-2028, cumulative real GDP growth is expected to reach 2,7%, placing it in the high range of estimates. The Nominal GDP, a relevant indicator for public finances, appears overall consistent with forecasts, albeit slightly higher than expected.
However, the estimates remain exposed to various risksIn the short term, these risks are balanced, but in the medium term they could curb growth. Uncertainty is mainly related to conflicts partners., tensions Business and investment dynamics, which could be slowed down by the concentration of projects financed by the NGEU program or by the trend in residential investments. Added to this is the vulnerability of the Italian economy to the volatility of financial markets, in a fragile international context and with high public debt. Finally, climate and environmental risks are an increasingly structural factor, as extreme weather events require additional resources for prevention and emergency management, impacting prices and production capacity.
In the coming months, the UPB will also evaluate the programmatic forecasts of the Dpfp, which include the effects of the budget measures, and will present the results in the next parliamentary hearing.
Last updated Friday, October 3, 2025, at 17:29 PM
