Italy's preferred method for financing increased defense spending involves issuing common EU debt, but this approach requires consensus from other EU member states.

On June 19, 2025, Italian Economy Minister Giancarlo Giorgetti addressed the Eurogroup meeting, emphasizing the urgent need to update the Stability Pact rules to better reflect current emergencies.

During the meeting, Giorgetti criticized the European Union's budget rules, labeling them 'stupid and senseless,' particularly for penalizing countries like Italy that are under infringement procedures for excessive deficits.

He pointed out the unfair treatment between EU member states, highlighting how those under excessive deficit procedures, such as Italy, are hindered in their ability to increase defense spending.

The EU Commission has proposed a framework allowing member states to increase defense spending by 1.5% of GDP annually for four years without facing penalties for exceeding the 3% deficit threshold.

However, Giorgetti explained that Italy, currently under an infringement procedure, cannot take advantage of this proposed flexibility, unlike non-deficit EU member states.

The Italian government remains cautious about any actions that could jeopardize its improving financial reputation, especially following recent credit rating upgrades from Moody's and S&P Global.

Giorgetti expressed concerns that accepting the EU's invitation to raise defense spending could hinder Italy's goal of reducing its deficit from 3.4% of GDP last year to 2.8% by 2026.

Despite these challenges, Italy is on track to meet NATO's defense spending target of 2% of GDP this year, although an upcoming NATO summit may raise this goal to 5%.

The Italian economy ministry reiterated the importance of finding solutions to these issues to effectively manage defense expenditures amid ongoing crises.

Giorgetti's remarks reflect a broader frustration among EU member states regarding the current fiscal rules, which many believe do not accommodate the pressing defense needs of the region.