Bank of Italy say the budget deficit exceeding 3% of GDP in 2027-28 could affect the country's exit from EU's excessive deficit procedure

A national central bank flagging fiscal slippage against the excessive deficit procedure threshold is a recurring pattern in the euro area, where national authorities of the country in question have historically been the first to quantify the gap before the Commission acts on it. The mechanism that matters for the BTP complex is not the EDP label itself but what delayed exit implies for the fiscal consolidation path Brussels will demand, since a prolonged procedure typically means tighter structural adjustment requirements feeding directly into the supply outlook for Italian paper. The distinction worth drawing is between slippage driven by one-off factors, which peer governments and the Commission have tended to accommodate, and structural deterioration, which has historically widened the BTP-bund spread until a credible corrective path is tabled. Bank of Italy commentary of this kind also tends to foreshadow the domestic political argument over the next budget law, making the tone of the government response the first tell. Worth observing is whether the Commission's own assessment aligns with the central bank's arithmetic and how the rating agencies frame the fiscal trajectory on their scheduled reviews. The comment is analytical rather than a policy decision, so the signal is directional.