Italy’s Cabinet trimmed the expected EU breathing room from the National Escape Clause, lowering the projected defence windfall from roughly €21–22 billion to about €14 billion and creating an up-to-€8 billion shortfall. The move deepens domestic political divides: Deputy PM Matteo Salvini pushed the cuts while PM Giorgia Meloni maintains support for Ukraine and NATO targets. Rome now plans to pursue €8 billion in SAFE loans (down from a planned €14.9 billion), and defence industry leaders and analysts warn that a prompt decision is needed to enable procurement planning and avoid capability gaps in Europe.
Italy Could Lose €8B in Defence Funding After Cabinet Cuts, Deepening Rift Over Ukraine Aid
The Italian Frecce Tricolori National Aerobatic Team performs during day one of the Air Show del Garda 2026 in Desenzano del Garda, Italy, on Sept. 5, 2026. (Richard Morgano/NurPhoto via Getty Images)
Italian military planners now face the prospect of losing up to €8 billion in anticipated defence funding after a Cabinet decision reduced Rome's expected benefit under the EU's National Escape Clause (NEC) from about €21–22 billion to roughly €14 billion.
Political Split Over Rearmament
Prime Minister Giorgia Meloni is squeezed between NATO spending commitments and growing domestic resistance to using taxpayers’ money for arms rather than health and social services. Deputy Prime Minister Matteo Salvini successfully pushed to scale back the NEC benefit, reflecting the League party's opposition to higher defence budgets and to sending military support to Ukraine. That position clashes with Meloni’s public backing of Kyiv and her stated commitment to NATO.
NEC, SAFE Loans and Industry Response
The National Escape Clause was designed to allow EU states to exclude a portion of defence spending from deficit calculations so they can rearm without breaching EU fiscal rules. In August, Rome said it would seek €8 billion in concessional loans from the EU’s SAFE defence funding programme, down from an earlier intention to request €14.9 billion.
'It's yet to be made definite but the reduction was agreed,' a government source told Defense News.
At a parliamentary hearing on Sept. 23, Leonardo CEO Lorenzo Mariani praised SAFE loans as a straightforward way to finance defence projects and pointed to concrete deals—such as Portugal’s purchase of FREMM frigates built by Leonardo and Fincantieri—that SAFE helped facilitate. Industry leaders say timely access to these funds is essential for procurement planning and programme stability.
Analyst Warning
Alessandro Marrone of the Istituto Affari Internazionali (IAI) urged the government to decide quickly on NEC and SAFE financing to enable effective planning by the defence ministry, close capability gaps in Europe as U.S. deployments shift next year, and follow through on commitments such as sending naval vessels to protect shipping in the Red Sea.
Context: Meloni has pledged to meet NATO’s 5% of GDP defence target and has said Italy reached 2.8% this year when including domestic security spending, but detailed budget breakdowns have not yet been published.
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