Italy has asked the European Commission to temporarily extend the scope of the EU’s National Escape Clause (NEC)—already applicable to defence-related public spending—to also cover investments and extraordinary measures aimed at addressing the energy crisis triggered by the war in Iran.
The NEC related to defence expenditure is valid from 2025 to 2028. It allows requesting Member States to deviate annually by up to 1.5% of GDP from the maximum ceilings for public expenditure growth agreed with the Commission under the reformed EU fiscal governance framework. While this arrangement would also apply to the corrective expenditure path of Italy under its Excessive Deficit Procedure, the country has so far not made use of it.
The energy shock resulting from the war in Iran is, by definition, a common shock affecting all EU countries. At some future point, this might justify activation of the General Escape Clause (GEC)—but only in the event of a “severe economic downturn in the euro area or the Union as a whole,” as stipulated in Regulation (EU) 2024/1263. At present, such conditions do not exist.
To justify recourse to the NEC, the Meloni government therefore needs to advance country-specific arguments. In practice, however, Italy’s specificity appears to depend largely on past mistakes in its energy policies—such as delays in diversifying away from fossil fuels, a structurally higher pass-through from gas prices to electricity bills, and inefficient use of NGEU funds. These are key reasons why the energy shock is affecting Italy asymetrically.
Why should such policy failures now be “rewarded” by the Commission through application of the NEC? European fiscal rules cannot serve as an insurance policy against errors in the economic policies of Member States. Other countries may view this as a case of moral hazard.
Italy argues that military security and energy security are being treated differently. There is, however, an important distinction between the two cases. In the case of defence, there was a political agreement across the entire Union. There was broad consensus that an emergency situation existed and justified granting Member States the discretion to activate the NEC or not. In the case of energy, by contrast—at least for the time being—we are dealing only with specific requests from Italy and Greece.
I am, of course, fully aware of the political dimension underlying Italy’s request. Yet accommodating it would amount to poor politics—as often happens when fiscal flexibility appears to be shaped by the political weight of large Member States.
In conclusion, I believe the Commission would be right to stand firm. If fiscal escape clauses were to be interpreted opportunistically every time a large Member State finds itself under electoral pressure, the credibility of our fiscal framework—recently reformed through a laborious process—would be rapidly eroded.