Italy’s 2025 Budget Gets Parliamentary Nod in Boost for Meloni

(Bloomberg) — Italy’s parliament gave a final green light to the 2025 budget just days before a year-end deadline, in a win for Prime Minister Giorgia Meloni.

The Senate passed next year’s budget early Saturday afternoon with 112 votes in favor from 181 members present. 

Meloni and Italian Finance Minister Giancarlo Giorgetti put together a package that aims to please voters with tax cuts, while keeping in line with European Union fiscal rules. The government plans to lower the country’s deficit to 3.3% of economic output next year, and to get that number below the bloc’s 3% ceiling by 2026.

Last-minute changes to the budget include leaving taxes on cryptocurrencies at 26% for the coming year and then boosting them to 33% in 2026, compared to an initial plan for a 42% tax.

Debt is still seen rising through 2026, in part due to costly state construction subsidies — known as the “superbonus” — which Meloni canceled when she came into office, though they’re still weighing on public finances. 

The prime minister’s pledge to lower taxes for medium and low-income brackets is helping to keep her firmly in power, though it means a slower path back to fiscal probity by EU standards. 

She’s being helped by the less-than-stellar performance of some of her EU neighbors. France isn’t planning to get its whopping 6.1% deficit under 3% of GDP until 2027, and Germany, while within the fiscal parameters, has an economy that shrank this year and is expected to stagnate in 2025 as well. 

Italian economic output has also slowed, but is still seen growing by 0.5% for 2024 and 0.8% next year, according to the country’s statistics office. 

Markets have taken note of Italy’s relatively sound situation and political stability, with the spread between Italian 10-year government bonds and equivalent German ones — a measure of risk — touching a three-year low earlier this month and still below 120 basis points.

Italy’s fiscal efforts will also likely be boosted by lower borrowing costs, with the parliamentary budget office estimating that lower yields will allow the government to save €1.7 billion ($1.8 billion) next year.  

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