Later in the evening, Fitch released its second assessment of Italia’s credit rating this year, reaffirming the BBB+ rating with a stable outlook which had already been confirmed last March.
Italy’s ratings – according to a statement from the agency – are underpinned by a large, increasingly diversified economy with high value added, as well as by the benefits in terms of institutional and financial stability derived from membership of the EU and the euro area. The ratings also benefit from high levels of wealth and relatively sound governance indicators. These strengths are offset by a very high public debt burden and limited medium-term growth prospects, factors which constrain fiscal flexibility and limit the capacity for debt reduction.
The budget deficit
Fitch forecasts a modest improvement in the budget deficit in 2026, bringing it down to 2.9 per cent of GDP (compared with a median of 3.2 per cent for countries with a BBB rating), thanks to prudent expenditure management and stable revenue, aided in part by a robust labour market. The measures taken so far to offset higher energy costs have been limited (less than 0.2 per cent of GDP) and budget-neutral. Public investment remains a key focus – driven by the National Recovery and Resilience Plan (PNRR) – with the aim of maintaining economic momentum in the medium term.
Flexibility in energy and defence spending
The government has invoked the national safeguard clause to allow for greater flexibility in spending on energy (0.6 per cent of GDP) and defence (0.9 per cent) over the period 2026–2028. Fitch expects actual expenditure to be lower than the nominal allocations, but the government is likely to revise its deficit targets for 2027–2028 upwards (compared with those set out in the Medium-Term Structural Plan) to cover these expenditure items. It also forecasts that deficits will remain broadly unchanged from 2026 onwards, with an improvement in the primary balance of 0.3 percentage points.
Overall, there continues to be a strong commitment (and a proven and growing focus) on fiscal prudence and compliance with EU budgetary rules, despite persistent long-term pressures linked to an ageing population, interest costs and climate change. According to Fitch’s baseline scenario, Italia is expected to exit the excessive deficit procedure next year.