The EU Commission is set to criticise the Italian government's reduction in excise duties on fuels in a report to be published on Wednesday. Rome has been asking for more fiscal flexibility to address the energy crisis, which Brussels deems should be directed at vulnerable families and industries.
Rome has set out a series of emergency measures to mitigate the rising energy costs caused by the war in Iran. After the International Monetary Fund (IMF), the European Commission is also set to argue that such broad and untargeted measures are ineffective, according to a document obtained by Euronews.
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In recent weeks, the Italian government has been increasingly vocal in calling for the fiscal flexibility recently granted to defence spending to be extended to cover spiking energy costs — including in a letter sent by Prime Minister Giorgia Meloni to European Commission President Ursula von der Leyen.
While von der Leyen has yet to reply to Meloni directly, the Commission is due to present its country-specific recommendations on Wednesday, one of the main tools of EU economic coordination and a key occasion to address fiscal policy.
According to an early draft of the recommendations seen by Euronews, Rome should "ensure that any measures taken to mitigate the impact of the hike in energy prices are temporary, targeted at protecting vulnerable households and addressing the needs of energy-intensive firms, preserve incentives for energy savings while ensuring that their fiscal cost is compatible with the recommended expenditure paths."
The report does not answer Meloni's request to expand the national escape clause — an extraordinary measure introduced last year to exempt defence spending from the EU's fiscal constraint framework.
The recommendations do suggest flexibility is possible, but only to support vulnerable households and the most exposed industries, not through horizontal subsidies.
The Commission points in particular to the experience of the 2022-2023 energy crisis, triggered by Russia's war of aggression on Ukraine, arguing that broad and untargeted measures carry a large fiscal cost while being socially and economically inefficient.
"Since the outbreak of the war in the Middle East in February 2026, Italy has adopted fiscal policy measures to mitigate the impact of high energy prices on households and firms," the document continues.
The Commission specifically flags an "untargeted" reduction in excise duties on fuels, a measure due to expire on 6 June, and a tax credit targeted at road transport, fishing and agricultural enterprises.
This aligns with the position of the International Monetary Fund, which last week said that "the recent broad-based reduction in excise duties on diesel and petrol to cushion the impact of the shock should be replaced with targeted cash transfers to the most vulnerable households."
The estimated fiscal cost of the measures is around 0.1% of GDP in 2026, but could rise to 0.3% if kept in place until year-end.
Italy already carries the EU's highest debt-to-GDP ratio, at around 138.5%, and the Commission is calling on Rome to ensure "net expenditure respects the corrective path recommended."
Italy also has among the highest energy costs in Europe. The disruption of Gulf supply routes has prompted the Commission to cut its expected GDP growth forecast for 2026 from 0.8% to 0.5%.
Last week, European Commissioner Raffaele Fitto — who belongs to Meloni's right-wing Brothers of Italy party — wrote to EU ministers suggesting unspent cohesion funds could be redirected to address the energy crisis.
However, the report notes that Italy's cohesion fund spending remains below the EU average, pointing to implementation difficulties stemming from fragmented governance and weak administrative capacity.
The draft also criticises Rome's energy policy for its structural reliance on costly gas-fired generation, which the Commission sees as a key barrier to electrification for both households and industry, and for its slow uptake of renewables.
While Brussels deems them inefficient, temporary tax reliefs on fossil fuels are extremely popular in Italy. The government introduced the measures as the country entered a crucial phase of local elections, with the second round scheduled for this weekend.
With parliamentary elections on the horizon next year, it remains to be seen whether the limited flexibility on offer will prompt Rome to lower the temperature — or seek an even louder escalation that could yield sizable electoral returns.
What seems certain is that, whatever fiscal space Brussels provides, the Italian government will ultimately need to reassure financial markets it can keep bankrolling its enormous national debt.