Italy may only spend half of EU Recovery Fund cash, expert warns

Italy may end up using half of the funds it has been granted under the EU’s vital post-pandemic recovery plan, Milan University Economics Professor Marco Leonardi told Euractiv Italy in an interview, warning of dire repercussions if Meloni’s plans to persuade the Commission to prolong spending deadlines fail.

If the government of Meloni (Fratelli d’Italia/ECR) is not successful in securing an extension of the spending deadline as planned, Italy is likely to spend significantly less than 50% of the total on actual projects, added Leonardi, also a former head of economic planning at the Prime Minister’s Office.

Italy’s difficulties in managing the Recovery Fund have attracted widespread attention from the media and public spending watchdogs. Despite being allocated €194.4 billion from the European Union as part of the EU Recovery Fund, the country faces challenges in spending it effectively.

So far, Italy has used only half of the €101 billion it has received, although it has managed to implement the most targets (178 out of 527) compared to other EU countries that have also received EU stimulus funds, a recent official report showed.

While the government touts its progress, Leonardi expresses concern.

He highlights that of the 50% of funding already allocated in Italy, 10% has gone to infrastructure projects, while the remaining 40% has been used to supplement automatic incentives such as the Superbonus (a tax benefit for those willing to undertake property upgrades that qualify as energy renovations) or Industry 4.0 (Italy’s national strategy for digitising industry).

In addition, many municipalities are foregoing EU funding because they fear they will miss the 2026 deadline for project completion. Without an extension, these uncompleted investments will lose EU funding, leading municipalities to abandon projects altogether due to financial constraints.

Leonardi notes that Italy is now “one year late” on its €200 billion plan due to revisions and changes in the control room. He warns that without an extension, Italy risks spending only half of the total €200 billion on actual projects.

As Euractiv reported earlier, despite the challenges EU member states face in delivering projects on time, the European Commission is sticking to the agreed deadline of 2026, stressing the temporary nature of the fund.

However, Leonardi suspects that “Meloni is banking on the prospect that she will have greater influence within the new Commission and secure an extension of the deadline for a few more years”.

He concluded that Meloni’s strategy hinges on securing this extension, as failure could have disastrous consequences for the country.

(Alessia Peretti, Simone Cantarini | Euractiv.it)