Italy will cut its budget deficit to 3% of GDP this year, the government said on Thursday, meeting the European Union’s ceiling for the first time since 2019, before the COVID-19 pandemic, and improving on a previous target of 3.3%, Reuters reported. The country’s 2026 budget framework, approved at an evening cabinet meeting, projects the deficit will fall further to 2.8% of GDP next year, maintaining a target set in April. "We are confirming a line of firm and prudent responsibility that takes into account the need to maintain public finance stability," Economy Minister Giancarlo Giorgetti said in a statement, emphasizing compliance with European rules. Last year, Italy’s deficit came in at 3.4%, comfortably within the government’s 3.8% goal. Recent data showed Italy’s GDP contracted 0.1% quarter-on-quarter in Q2 2025. The government has marginally lowered its forecasts for full-year 2025 growth to 0.5%, down from April’s projection of 0.6%.