Italy says defence spending hikes should also aim to boost growth #ItalyFinance

ROME (Reuters) – Any increase in national defence spending should also be aimed at boosting economic growth, Italian Economy Minister Giancarlo Giorgetti said on Friday, as European states grapple with U.S. pressure to shoulder the costs of their own security.

Highly indebted Italy is projecting defence spending of 1.61% of gross domestic product (GDP) in 2027. That is below a current 2% NATO target, which U.S. President Donald Trump wants raised to 5%.

“When we discuss an increase in defence spending … I would also like to see evidence of what can come out of it in terms of economic growth,” Giorgetti said during a press conference.

Giorgetti identified the automotive industry as one sector in which factories could be converted to defence production, saying that could have a knock-on effect in terms of growth.

He said the government would have to consider any defence spending increases in the light of what would be best for Italy.

Prime Minister Giorgia Meloni this week welcomed a proposal from European Commission President Ursula von der Leyen to exclude defence from EU limits on government spending, but said that more could be done.

Italy has called on the EU to use common debt to pay for higher defence spending – traditionally anathema to the more fiscally conservative northern European EU members such as Germany and the Netherlands.

Daily Corriere della Sera reported on Friday that Italy was considering boosting defence investment to 2.5% of GDP if the EU agrees to exempt such spending from its fiscal rules.

As part of talks at EU level, officials have been discussing the possible use for defence of about 90 billion euros of loans and grants from the EU’s post-pandemic recovery fund that are unlikely to be spent before the planned 2026 deadline.

(Reporting by Giuseppe Fonte and Angelo Amante; Editing by Ros Russell)