Italy seeks budget leeway for defence, names EU Commission candidate

By Giuseppe Fonte and Marta Di Donfrancesco

ROME (Reuters) - Italian Economy Minister Giancarlo Giorgetti said on Wednesday he hoped the European Commission would give special consideration to defence spending in assessing compliance with EU budget rules.

Speaking in the Chamber of Deputies, Giorgetti also said his cabinet colleague Raffaele Fitto, in charge of European Union affairs, was the country's candidate for a role in the new EU Commission expected to be headed by Ursula von der Leyen.

"We hope the European Commission will recognise defense spending as a relevant factor" in allowing leeway under the EU's revamped budget rules, Giorgetti said.

"It is a necessary condition for the Italian government to meet its political commitment to adjust military spending," he added.

Following Russia's invasion of Ukraine, NATO's European members are under growing pressure from the United States to boost their defence outlays to at least 2% of each country's gross domestic product (GDP).

In Italy, defence spending has fallen from 1.59% of GDP in 2020 to 1.46% in 2023. Prime Minister Giorgia Meloni said at a NATO summit this month she intends to reverse the trend by raising it to 1.6% next year.

Rome was put under a so-called Excessive Deficit Procedure by the EU last month and is now negotiating a path with Brussels to reduce its fiscal gap while complying with the latest reform of the bloc's two-decade-old fiscal rules.

These set a slow but steady pace of deficit and debt reduction from 2025 over four to seven years, with the longer option available if a country undertakes reforms and investments in areas the EU prioritises.

Giorgetti's remarks come as von der Leyen is trying to convince EU lawmakers to back her for a second term as president of the European Commission.

The minister announced Fitto's candidacy before Meloni's Brothers of Italy party has said whether its 24 lawmakers will support von der Leyen in a European Parliament vote on Thursday.

Fitto "is our candidate, he's the horse that's running, we're cheering," Giorgetti said.

Fitto, one of Meloni's closest aides, is currently responsible for implementing Italy's post-COVID Recovery Plan, under which it is due to receive a total of some 194 billion euros ($212.08 billion) in grants and cheap loans from the EU through 2026.

($1 = 0.9147 euros)

(Editing by Gavin Jones)