With a tax burden of 43 per cent and stagnant GDP, Italy needs reforms

There are every reason to prepare for a difficult period. Geopolitical tensions and energy risks complicate the picture; it is therefore right to keep public finances in order and preserve Italy’s credibility. But financial prudence cannot be the sole focus of economic policy: it is a prerequisite, but not the end goal.

According to the latest Eurostat figures, Italy is among the European countries with the highest tax burden: in 2025, it reached 43 per cent of GDP, compared with an EU average of 40.7 per cent; only four countries have a higher tax burden (France, Denmark, Belgium and Austria). Furthermore, since 2022, Italy’s tax burden has risen by 1.1 percentage points, compared with just 0.1 percentage points for the European average. However, this increase in the tax burden has not been matched by robust growth. The latest Eurostat figures for the third quarter of 2026 show the Italian economy stagnating compared with the previous three months; only France fared worse (-0.1 per cent). In the same quarter, the EU’s GDP grew by 0.5 per cent and that of the eurozone by 0.4 per cent. On an annual basis, Italy recorded +0.8 per cent, compared with +1.5 per cent for the EU and +1.3 per cent for the eurozone. This is no reason to underestimate the difficult situation, nor to jeopardise financial stability. But it is a wake-up call: keeping the public finances in order is a necessary condition, not a growth policy.

A country with some of the highest taxes in Europe and an economy growing well below the average cannot simply content itself with managing the status quo. The discussion on the Budget Bill and the election campaign programmes should raise the level of public debate by placing reforms to foster growth – productivity, investment, competition and employment – at the heart of the next parliamentary term. And it must tackle the tax burden weighing heavily on businesses and households. Not with promises of unfunded tax cuts, but by creating the conditions to reduce taxes through stronger growth and more efficient public spending.