Italy’s promise to increase its defense spending to help Ukraine can destroy the government’s efforts to limit its huge public debt, which also threatens to credit rating The Eurozone’s 3rd largest economy says analysts.

European Union’s attempt to Increase military spendingin response to the Trump government’s moves to approach Russia is going to burden budgets all over the block.

Italy, however, with its extremely low defensive costs, heavy debt load and the highest eurozone borrowing costs, is in a particularly difficult position.

According to Reuters, Rome spends approximately today 1.5% of GDP for defenseone of the lowest levels in the EU with Spain, Portugal and Belgium.

The increase in that percentage to 3% for the next four yearsas the European Commission urges, would mean finding additional 30-35 billion euroseither through additional lending or by cut cuts.

It is a one difficult choice to be closely monitored by the financial markets and their rating agencies focusing on the course of the 2nd largest public debt in the eurozone.

“If these additional expenses are funded through the issuance of a new debt, they will be burdened by Italy’s already tense budget prospects.”said Eiko Sievert, Executive Director of Scope Ratings.

What do evaluation houses say – Estimates of GDP

Italy is facing and with evaluations which will be carried out by all the main houses, starting by Fitch on Friday.

Until recently, the Rome fed hopes for upgradesbut they have weaken Due to the weakening of the economy and the risk of raising its debt due to defense, which with about 135% of GDP is the second after Greece.

The Italy’s debt is expected to grow almost 138% in 2026before it is firmly reduced by 2027.

However, the European Commission’s plans to increase defense spending would mean that the debt of Italy would continue to rises to about 145% by 2029, According to Scope Ratings calculations, which will review Italy on May 23.

Italy’s internal policy also blurs the image.

How, and even if, the defensive budget will increase, as promised in Brussels, is a growing source of tension In her tricolor coalition Georgia And it threatens political stability, which so far reassures markets.

THE finance Giancarlo Georgetti, from Lega’s far -right party, said last month that it is contrary with Increase in public debtbut any additional defense costs should also be funded at the expense of health or public services. Melon non -binding attitude and stressed the importance of debt retention.

Italy, which spent about 100 billion eurosor 4.5% of GDPfor the Debt Service in 2024saw her bond yields are rising sharply In the last month, along with those of her bonds in the eurozone, as the prospect of an increase in defense spending under the leadership of Germany increased.

The performance of 10 -year -old bond Rome’s BTP reference arrived at high eight -month -old last month over 4%. A further increase in borrowing costs would comply with the Treasury’s difficult efforts to manage debt management.

“If this appreciation is not reversed, it could lead to a less favorable course for interest rates, interest costs and budget deficits this year.”said Loredana Federico, UNICREDIT’s head in Italy.

OR S & P Global said in its report on EU re -equipment that it is “Unlikely to stimulate economic growth.”

Italy’s sluggish economy noted 0.1% growth In the fourth quarter of 2024 compared to the previous three months, after stagnation in the third quarter. And no short -term recovery is expected.

The Italian Business Lobby Lobby 2025 at 0.6%, by the 0.9% estimate made in October and only half of the official government target for 1.2%.

According to the Bank of Italy Governor, any impulse of development due to defense will only be short -lived.

“The construction of war equipment does not contribute to an increase in a country’s growth potential,” He said in a speech in January, as EU re -equipment plans began to take flesh and bones.