Italy: fiscal consolidation from 2025 onwards

The draft 2025 budget presented by the Italian government on 15 October translates PM Giorgia Meloni's promises into actual data . Probably insufficiently ambitious for some, it has the double merit of being political feasible and , at least in principle, being consistent with the new European rules for monitoring excessive deficits. The President of the Council has succeeded in finding a compromise between the different parties in her coalition , whose starting positions may have been quite di verse at the start of the debate . Nor has the government engaged in a ny public confrontation with the European Commission. The assumptions underlying the budgeting in terms of the growth and interest scenario are up for debate . But the budget nevertheless reflects a relatively realistic picture about the country's fiscal situation and the need for consolidation. The government will now have to show that it can also “walk the walk” by implementing its budget to meet the objectives it has set for itself. The draft budget was rather well received by the markets. Yield spreads have continued the tightening seen in recent weeks.