Italian economic policy and growth outlook

Italian Economy Minister Giancarlo Giorgetti has outlined several fiscal proposals for the 2027 budget. He suggested expanding the flat tax regime by raising the revenue threshold for self-employed workers from 85,000 to 100,000 euros, a move he noted would require negotiations with the European Union. To combat brain drain, Giorgetti proposed a fiscal incentive—described as a “sort of flat tax”—for companies that increase salaries for younger employees.

Addressing pension reform, the Minister acknowledged a “distortion” in the current system between workers who began before 1996 and those who started after. He noted that any reforms, such as proposals for early retirement at age 64, must ensure long-term fiscal sustainability and maintain the balance of public accounts.

On the macroeconomic front, Italy’s economic outlook shows signs of resilience. Giorgetti indicated that GDP growth in 2026 could approach 1%, surpassing the official 0.6% forecast, with current data suggesting an acquired growth rate of 0.8%. This trend is supported by rising tax revenues, which reached 346.1 billion euros in the first seven months of 2026, a 2.8% increase over the previous year.

Despite this growth, significant structural challenges remain. Economists warn that low productivity and a “demographic winter”—marked by record-low birth rates and an aging population—threaten long-term stability. Additionally, the emigration of highly educated citizens is estimated to cost the country up to 11 billion euros annually, highlighting a critical loss of human capital.