The Bank of Italy has urged the government to act cautiously in its upcoming 2026 budget, calling for solid funding sources and structural reforms to preserve fiscal stability.
Speaking before Parliament on the government’s financial framework, Andrea Brandolini, head of the Bank’s Economics and Statistics Department, stressed that “funding measures must be certain” and warned against “temporary spending increases or short-term tax cuts” that risk inflating debt and proving difficult to reverse.
The Bank also noted a lack of detail in the government’s policy plans, which mention tax relief for workers, new healthcare funding, and support for families, but provide no clear indication of how these measures will be financed.
Rome’s central bank called for greater transparency and a shift in spending toward investments in research, education, and innovation — areas it says are crucial for long-term productivity and growth. Brandolini also urged a review of Italy’s fragmented system of tax breaks, arguing that rationalizing incentives could “free up resources and reduce distortions.”
While acknowledging progress on fiscal consolidation, the Bank warned that high debt levels, geopolitical tensions, and rising borrowing costs still pose significant risks. In this context, Governor Fabio Panetta reminded policymakers that “solidarity is not an option but a necessity,” linking economic stability to broader social and global cohesion.