Italy’s €194 Billion EU Recovery Plan Falters as Debt Nears 138.5% of GDP

1 articles · Updated · Financial Times · May 26

Italy’s €194 billion share of the EU recovery fund has delivered only a limited economic lift, with GDP growth at just 0.5% in 2025 and forecasts showing little improvement through next year.
Six revisions, missed benchmarks and inflation-driven construction costs blunted the plan, while critics say reforms were diluted and many projects became hard to track or assess.
€166 billion has already been disbursed across nine of 10 instalments, yet Italy had spent only 57% of its allocation by the end of 2025, raising questions over transparency and execution.
Debt has climbed from just under 134% of GDP in 2023 to more than 137% in 2025 and is forecast at 138.5% this year, which would make Italy the EU’s most indebted economy ahead of Greece.
Brussels argues the rewrites were strategic rather than a retreat, and a workaround lets at least €7 billion be parked in special facilities so some projects can continue beyond the 2026 deadline.

With billions spent and little growth, is Italy's struggle a warning sign for the future of EU-wide economic rescue programs?

As Italy’s €194bn reboot falters, did the EU’s largest recovery fund simply finance more debt without fixing deep-rooted economic decay?