Call for sacrifices or promise to avoid them? With the Italian budget bill for 2025 due to be presented before October 20, the government has issued dissonant messages on the fiscal policy to be pursued. In a context marked by resilient but moderate growth, there is limited budgetary room for maneuver, a heavy debt burden whose weight amounts to 137% of gross domestic product (GDP) and the absolute necessity of sending back a "credible" image to the financial markets.

On Wednesday, October 9, Council President Giorgia Meloni grabbed her phone to record a video message for her constituents, in which she claimed to read "fanciful statements that [she would] like to raise taxes." "But that's what left-wing governments did. We're lowering them," she said, promising that no "new sacrifices" would be asked of Italians.

For an Italian Right whose deep-rooted identity is linked to a discourse of defending taxpayers, the challenge is also to please its base with a view to a cycle of three regional elections due to open at the end of October. In this respect, Meloni was extinguishing a fire that was lit, on Thursday, October 3, by her Economy and Finance Minister Giancarlo Giorgetti (League, far right). In an interview with the Bloomberg agency, he too had used the term "sacrifices," but presented these efforts as a necessity "for everyone."

On this occasion, the minister announced an increase in the contributions to be paid by companies that have benefited from the current economic crisis. Giorgetti specifically targeted the arms industry and the big banks, which benefited from the high interest rates set by the European Central Bank, but he also spoke of the need for an effort to be made by "individuals ... small, medium and large companies."

Market reaction was severe – as it was in the summer of 2023, when Italian government announced a tax on lenders' excess profits, before being forced to rescale the project. After the economy and finance minister's statements, the country's benchmark stock market index fell by 1.5%. Giorgetti also finds himself politically isolated, with his Forza Italia (center-right) allies and representatives of his own party rejecting the idea of a more restrictive fiscal policy. Thus, Meloni has announced that income taxes will be cut and that subsidies for lower-income families will be maintained in 2025.

Beyond electoral deadlines, however, Giorgetti's objective is to bring the public deficit – which reached 3.8% of GDP in 2024 – below 3% by 2026. He must ensure compliance with the new framework introduced by the reform of the European Union's budgetary rules, which will come into force on January 1, 2025, bearing in mind that Italy, like France, is the subject of an excessive deficit procedure launched by Brussels this summer.

You have 39.14% of this article left to read. The rest is for subscribers only.