ROME, Dec 28 - The Italian Senate has approved the government's 2025 budget, finalizing a package aimed at reducing the fiscal deficit to 3.3% of GDP from a targeted 3.8% in 2024. This budget, passed with a vote of 108 to 63, is part of Prime Minister Giorgia Meloni's efforts to comply with European Union mandates to lower the deficit after significant overshoots in previous years.
The budget includes tax cuts for low and medium-income earners and anticipates an increase in public debt, projected to rise from 134.8% of GDP last year to 137.8% by 2026. This increase is attributed to the delayed impacts of state subsidies for energy-saving renovations.
Italy's economic growth has stagnated, with current projections indicating growth at about half of the government's 1% target for the year. However, the government may benefit from declining borrowing costs, with forecasts suggesting savings on sovereign bond yields that could amount to 1.7 billion euros next year.