EU Commission Rebukes Italy's Fuel Tax Cuts as 138.5% Debt Limits Energy Relief
Updated
Updated · Euronews · Jun 2
EU Commission Rebukes Italy's Fuel Tax Cuts as 138.5% Debt Limits Energy Relief
3 articles · Updated · Euronews · Jun 2
Summary
A draft EU report due Wednesday says Italy's fuel excise cuts are untargeted and should give way to temporary support for vulnerable households and energy-intensive firms.
The Commission says broad subsidies blunt energy-saving incentives and carry rising fiscal costs—about 0.1% of GDP in 2026, potentially 0.3% if extended through year-end.
Rome had pressed Brussels to widen fiscal flexibility granted for defence spending to cover the Iran-driven energy shock, but the draft offers only limited room for targeted aid and does not expand the escape clause.
Italy's 138.5% debt-to-GDP ratio and slowing growth sharpen the warning: the Commission cut its 2026 GDP forecast to 0.5% from 0.8% as Gulf supply disruptions lifted energy costs.
The criticism also echoes the IMF and revives lessons from the 2022-23 energy crisis, while exposing deeper Italian weaknesses in gas dependence, slow renewables uptake and weak cohesion-fund execution.