The Haizum Italian Insider Report is a monthly news service that monitors the most relevant issues in Italy. This document focuses on political, Economic, and Strategic matters, considering the role of Italy within the European Union, the MENA region, and Transatlantic Relations. The report will deliver clever insights by leveraging Haizum’s deep connections in the national institutional ecosystem.
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December 2025 saw Italy wrapping up a turbulent year with high-stakes budget maneuvers, strategic industrial shifts, and assertive diplomatic engagements. Prime Minister Giorgia Meloni’s government narrowly steered a €22 billion budget law through Parliament in late December, with the decisive vote on December 30, 2025, touting “impossible” feats in tax cuts and welfare funding, even as coalition rifts flared over last-minute allocations disputed within the majority. In foreign affairs, Rome balanced steadfast support for Ukraine with cautious limits: Meloni joined EU leaders in backing new Ukraine aid but reiterated that Italy would not deploy troops to Ukraine. Meanwhile, Italy pressed its Mattei Plan vision of energy and development partnerships in the Mediterranean, aligning European support for North Africa amid ongoing migration and security challenges.
On the economic front, Italy notched a win as the EU approved a €12.8 billion Recovery Plan disbursement after Rome met 32 reform milestones. This bolstered a slowing economy, which closed 2025 with modest ~0.4% growth (among the weakest in the EU), but easing inflation and lower bond spreads boosted fiscal breathing. Energy security markedly improved: by year-end Italy had reduced Russian gas imports to marginal levels replacing them with supplies from Algeria, Egypt and beyond. National oil major ENI doubled down on this diversification, inking new long-term LNG contracts in Asia and the Middle East, and bringing in a global infrastructure investor as a minority partner in its carbon capture and storage business. In parallel, defense modernization accelerated, Italy tapped EU “SAFE” funds for military procurement and awarded Leonardo new radar contracts, while domestic security strategy gained urgency with a critical-infrastructure resilience agenda moving forward. Across Italy’s strategic industries, December brought transformation: Fincantieri expanded into subsea telecom cables, Intesa Sanpaolo unlocked fresh EU funding for businesses, Leonardo showcased cutting-edge aviation technology, and Telecom Italia edged closer to a historic network spin-off. In sum, Italy ended 2025 on a proactive note, building on its G7-era momentum to fortify economic and security foundations at home and amplify its voice in Europe’s strategic debates.
Italy’s controversial repeal of the “abuse of office” crime for public officials, enacted in 2024, met an EU response in December. European institutions agreed on an anti-corruption directive setting minimum standards, which, once adopted and transposed, would limit member states’ ability to fall below a common baseline. Meloni’s government had resisted making abuse of office a mandatory crime, fearing constraints on local administrators, but ultimately converged on the trilogue compromise. The new directive would require Italy, after transposition, to ensure its criminal-law framework meets the directive’s minimum standards Anti-graft advocates described it as a step forward toward common standards, ensuring no EU country, not even Italy, can drop below the agreed baseline in fighting corruption. Rome is expected to prepare implementing legislation to avoid infringement proceedings. Amid this reform push, Italian institutions saw other notable developments.
After months of scrutiny over a cybersecurity breach at defense firm Leonardo, the situation triggered a national security alarm and highlighted the need for stronger internal oversight and cyber resilience. Separately, Parliament’s committees advanced key appointments for governance bodies including the state railways and the data protection authority. These moves, paired with December’s anti-corruption measures, underscore Italy’s effort to shore up institutional credibility heading into 2026.
The Meloni government navigated a fraught 2026 budget process that climaxed in late December. On December 23 the Senate delivered the key confidence vote on the €22 billion budget bill, enabling tax cuts for middle- income families and an increase in welfare support despite tight fiscal margins.
Economy Minister Giorgetti lauded the package, claiming the government “did things that seemed impossible” and projecting a 2.8% of GDP deficit in 2026, according to the government’s planning documents. To fund the expansionary measures, the law imposes a one-off levy on banks and insurers expected to raise €4 billion, alongside a large-scale tax amnesty that waives penalties on unpaid taxes through 2023. The European Commission, in its assessment, deemed the budget broadly compatible with EU fiscal rules.
However, the rushed budget vote, forced through via confidence motion, exposed coalition rifts. Junior partners bristled at last-minute revisions: a controversial earmark was scrapped after public outcry, and a contested tax provision linked to favoring Mondadori was removed, triggering backlash within Forza Italia’s orbit. Tensions also flared between Giorgetti and Deputy PMMatteo Salvini over pension age tweaks and spending priorities. Meloni intervened to broker compromises and ultimately held her majority together through the final vote. The episode underscored frictions in the conservative alliance and fueled speculation about early-2026 adjustments.
In a special December 30 meeting, the cabinet approved a sixth Ukraine aid decree, combining humanitarian support with defensive assistance, with operational details not fully public. Undersecretary Mantovano noted Italy will send generators and winter equipment in early 2026 rather than new weapons systems, as public support showed signs of fatigue, according to polling trends reported in Italy.
On domestic policy, Meloni used her annual press conference to outline a 15-month “endgame” for key reforms before the next election, including an institutional reform introducing a French-style semi-presidential system, finalizing justice reforms to speed up trials, and implementing the new fiscal autonomy law for regions. Lastly, the government highlighted a positive close to 2025: Italy’s borrowing costs dropped to their lowest in years, a development Meloni credited to restored market confidence and which Giorgetti said could save about €17 billion in interest over 5 years, based on government estimates.
Italy continued to actively police foreign investments in strategic sectors through its “golden power” screening regime. In December, the long-running corporate saga involving tire maker Pirelli and its Chinese shareholder reached a turning point. Government authorities formally dismissed a probe into whether Sinochem violated Rome’s governance conditions. The inquiry found no compromise of Pirelli’s autonomy, easing tensions with Beijing and reassuring investors after months of uncertainty.
Nonetheless, officials signaled vigilance on other fronts: the Chinese fund FountainVest’s bid to acquire EuroGroup Laminations remained under review, with no final decision publicly confirmed yet. The government’s annual report showed a 15% rise in filings, and Italy blocked a transaction outright for the first time in 2025, underscoring a tougher stance on security-sensitive deals. Ministers are considering refinements to extend screening to emerging technologies such as cloud and space.
With NATO expectations rising, Italy debated how to structure a significant defense spending increase. Experts urged a coherent, capability-driven approach focused on air and missile defense, space resilience and cyber protection, rather than fragmented procurement. Italy applied for EU SAFE loans to finance key programs including Eurodrone, new air-defense frigates and ammunition stockpiles. These loans benefit from fiscal safeguards, helping Italy pursue NATO’s defense spending target by 2028 without destabilizing public finances.
Italy awarded Leonardo a major contract for next-generation long-range missile defense radars, strengthening NATO-integrated early warning capabilities. A reported test of the upgraded Aster-30 interceptor reinforced progress on the SAMP/T system. Leonardo and Fincantieri also explored joint naval platforms aimed at export markets. December’s developments reinforced Italy’s ambition to act as a driver of European defense integration.
At the December EU summit, Meloni reiterated support for Ukraine while excluding Italian troop deployments. The EU agreed to strengthen aid and training support under existing frameworks. Italy secured cautious language on the use of frozen Russian assets and pushed migration burden-sharing and Western Balkans enlargement, while linking border security to internal EUcohesion. Furthermore, Italy backed multi-year Ukraine funding and enlargement steps for the Western Balkans, while arguing for fiscal flexibility to support defense and digital investment in 2026.
Italy promoted the Mattei Plan at the G20 Compact with Africa, outlining renewable and infrastructure priorities. Diplomatic engagement in Egypt and Saudi Arabia focused on transport and megaproject cooperation. A symbolic thaw with France emerged on the sidelines of the EU summit, and Italy nominated Elisabetta Belloni for the EU Special Representative for the Mediterranean role, signaling ambition to lead on regional stability.
Italy reduced reliance on Russian gas to marginal levels, supported by liquefied natural gas diversification, pipeline flows and new floating terminals.
ENI signed long-term LNG supply agreements with Türkiye and Thailand, reinforcing its global trading strategy and targeting 20 million tons per year by 2030.
ENI sold a 49.9% stake in its carbon capture and storage unit to Global Infrastructure Partners, accelerating projects in Ravenna and the North Sea.
Italy also approved incentives for heat pumps, green hydrogen support and cross-border hydrogen cooperation in the Adriatic, balancing energy security with decarbonization.
The EU greenlit a €12.8 billion Recovery and Resilience Plan payment, lifting total payments to over 2/3 of the allocation. Funds target digitalization, education, research and local resilience projects. With 2026 implementation deadlines approaching, Italy is seeking limited plan adjustments to improve execution. Growth remained weak at around 0.4%, but inflation eased further and bond spreads narrowed sharply, improving fiscal sustainability.
Budget measures increased the banking sector’s contribution through tax changes, prompting debate over credit availability. Intesa Sanpaolo signed €700 million in European Investment Bank-backed lending for small and medium-sized enterprises and climate investment and concluded a major labor agreement expanding flexible work and performance incentives. Equity markets remained subdued, though December saw increased capital raising, including a bond issue by ITA airways.
Italy advanced a national resilience strategy aligned with EU standards, focusing on risk assessments, drills and coordinated. Parliament approved the creation of a National Situational Awareness Center to integrate cyber, financial and security data, with operations expected by 2026.
Security services conducted counterterrorism operations against online radicalization while maintaining a “moderate” threat assessment. Anti-mafia action intensified, with life sentences for key figures and record asset seizures exceeding €2 billion. New measures aimed to strengthen penalties and protections for businesses resisting extortion, reinforcing Italy’s security posture ahead of 2026.
Fincantieri partnered with Prysmian to acquire UK/US-based submarine cable specialist Xtera for $65 million. Prysmian takes 80%, Fincantieri 20%, creating a “one-stop” provider of undersea fiber-optic systems. Fincantieri will integrate subsea security and unmanned systems, aligning with growing geopolitical concerns over cable infrastructure.
ENI signed 10-year LNG deals with Türkiye’s BOTAŞ and Thailand’s Gulf Energy, advancing its 20 MTPA target by 2030 and expanding in Asia. It also sold a 49.9% stake in its carbon capture unit to Global Infrastructure Partners, valuing the venture at ~€550 million. The joint control model helps scale projects like Ravenna CCS and UK’s HyNet. ENI enters 2026 balancing upstream gas growth with energy transition finance and new shareholder returns.
Leonardo won a €250 million radar contract from the Italian defense ministry for NATO-integrated missile defense systems. It also completed the first flight of its Next Generation Civil Tiltrotor, blending fixed-wing speed with helicopter lift. The milestone supports future civilian/military aircraft by the 2030s.
Additional wins included US baggage handling system contracts and updated 2025 guidance. Leonardo enters 2026 strong in both defense and innovation.
TIM’s €22 billion NetCo sale to KKR moved forward after EU and Italian approvals, with closure expected by mid-2026. The government still aims to merge FiberCop and Open Fiber into a single broadband network, though KKR is cautious. Meanwhile, Italy’s fiber plan faces delays, with revised targets and tensions over implementation. TIM’s Brazil unit and cost-cutting sustained stability, while its transformation into a debt-light service company hinges on successful execution in 2026.
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