The text of the 2026 Manoeuvre has completed its first crucial passage and, having passed the ‘vignette’, is now officially on its way to parliamentary debate. Despite the fact that the document offers a clear overview of the executive’s priorities, it must be emphasised that itsapproval, which took place on 17 October, marks the start of a constrained discussion: as Economy Minister Giancarlo Giorgettireiterated, any changes must not alter the budget balances already established.

Little added value, many shadows on coverage

The most noticeable feature of this Budget Law is its unusually small size, referred to not surprisingly as ‘mignon’. With a total value of just EUR 18.7 billion (about 0.8% of GDP), it is the smallest manoeuvre at least since 2014. This choice, motivated by the firm desire to avoid deficit manoeuvres and the prospect of a new Stability Pact that will impose greater rigour, results in a net borrowing of less than EUR 1 billion, an extraordinarily low figure compared to previous years.

However, it is precisely the sustainability of the coverage that raises the first critical doubts. The government has financed the measures by drawing partly from improved tax revenues (due to higher employment and inflation) and, significantly, from the reshaping of the NRP. This last operation, a 5.1 billion ‘accounting round’ earmarked for 4 billion over three years for business incentives, represents a one-off manoeuvre.

Critical Element: About 48 per cent of the coverage (about EUR 7.3 billion) is of a temporary nature, coming from items such as PNRR reshaping and financial sector taxation. This is worrying, since these resources would finance tax cuts and expenditure increases that are instead expected to be permanent, leaving an open question about future coverage.

The ‘silent move’ of Giorgetti

Spending restraint was also pursued through a decisive Spending Review on ministries, often referred to as Minister Giorgetti’s ‘silent move’. The mechanism adopted is pragmatic: aligning the budgets of the ministries to the expenditure actually incurred in the previous year, effectively cutting unused resources. Departments such as Infrastructure (-€524 million), MEF (-€465 million) and Environment (-€377 million) will suffer the greatest cost reductions.

On the tax front, the main intervention is the IRPEF reform for 2026, financed with EUR 4.9 billion. The intention is to lighten the tax burden on workers by introducing a three-tier structure:

• Up to €28,000: 23%.
• From €28,001 to €50,000: 33% (reduced from 35%)
• Over €50,000: 43%.

Taxes on the financial sector: a form of ‘fiscal paternalism’?

An economically and politically relevant choice is the massive intervention in the financial sector, which we could call a kind of ‘fiscal paternalism’. The manoeuvre, worth 11 billion over the three-year period, includes an increase inIRAP for banks and insurance companies (from 4.65% to 6.65%), but above all a tightening of taxation on reserves and dividends.

Highlighted risk: Increased taxation for banks, which are not all characterised by the same profitability, could result in increased costs for end customers, partly cancelling out the hoped-for social benefit.

Business and labour: incentives and distortive measures

Several billion is earmarked for measures to support businesses and workers, with the return of ‘Industry 4.0’ -like investment incentives (over 8 billion in the three-year period) and the establishment of a Special Economic Zone (SEZ) for the whole of southern Italy.

In the field of labour, the reduction of taxation to 1 per cent on productivity bonuses (with ceiling raised to EUR 5,000) stands out. However, the introduction of the Flat Tax at 15% on overtime, night work and holidays, provided they are regulated by collective bargaining, raises concerns. Indeed, this measure is considered distorting, as it risks creating unjustified income disparities between workers who perform similar tasks, based solely on the type of their contract.

Health, Pensions and Families: Missing Resources and Reforms

The manoeuvre allocates an extra 2.4 billion for the National Health Service (NHS), an increase that will bring healthcare spending to 6.5 per cent of GDP (2016 level) and most of which will be allocated to salaries.

Reflection: Experts agree that merely increasing resources is not enough. For an ailing system such as healthcare, the increase in expenditure must necessarily be accompanied by a strong and imperative streamlining of the system as a whole.

For pensions, some EUR 2 billion of additional expenditure is planned over the three-year period, with the extension of measures such as ‘Quota 103’ and ‘Women’s Option’, while for families, the EUR 1,000 Birth Bonus and the extension of support for crèches stand out.

The final unknown: short-term rentals and asymmetric taxation

A still open point of contention concerns the proposal to increase the taxation on short-term rentals from $21 to $26 for those who use intermediary portals. This measure, on which the majority appears to be divided, highlights the risk of asymmetric taxation based on the distribution channel, an element that may generate negative implications for the market.

In conclusion

The Manovra 2026 is presented as a Budget Law under the banner of financial rigour and prudence. The government shows excellent attention to public accounts, laying the groundwork for a potential early exit from the European infringement procedure. Nevertheless, the most critical fact remains the decision to finance measures of a permanent nature (tax cuts and expenditure increases) with resources that are often one-offs (such as those deriving from remodelling and extraordinary taxation). This approach leaves the game on the future sustainability of public accounts still uncertain and dependent on the manoeuvres that will be needed in the years to come.