Italy, in 2026, the national debt ratio is expected to be the highest in Europe... surpassing Greece

Italy is expected to surpass Greece in 2026 to become the European country with the highest ratio of national debt to gross domestic product, and the focus of Europe’s fiscal stability will shift once again.

According to Reuters on the 24th (local time), the Italian government predicts in its latest budget plan that this year’s debt ratio will reach 138.6%, higher than last year’s 137.1%. The national debt ratio is an indicator of how large a country’s debt is relative to its economic size; the higher the value, the greater the potential burden on fiscal operations. This forecast is believed to reflect energy price instability caused by Middle Eastern tensions. For Italy, which relies heavily on imported energy, rising international energy prices are likely to directly increase household and business costs and raise the need for government support.

The Italian government also explicitly mentioned this point. In the recently released Annual Economic and Financial Report (DEF), the government explained that support is needed for households and businesses to cope with energy shocks, and expressed concern about downside risks to the economy—that is, the possibility that growth rates may fall below expectations. In fact, Italy projects that its GDP growth rate for this year and next will both be 0.6%, but also indicates that future forecasts may be even lower. If economic growth is not strong enough, debt of the same scale will inevitably seem more burdensome in relative terms.

In contrast, Greece has recently shown a markedly different trend. It is estimated that Greece’s debt ratio will decrease from 145.9% in 2025 to around 137% this year. Greece, once considered the source of the European fiscal crisis, has been able to rapidly reduce its debt ratio, thanks to relatively stable growth momentum. Benefiting from a recovery in domestic demand and a booming tourism industry, Greece’s GDP growth rate has exceeded 2% for nearly three years, helping to expand the economic size used as the denominator, thereby lowering the debt ratio.

It is estimated that Italy’s debt ratio will reach 138.5% next year and then slightly decline to 137.9% in 2028, further decreasing to 136.3% in 2029. However, the pace of decline is relatively slow, and if external shocks such as sluggish growth or a further rise in energy prices occur, fiscal burdens could persist longer than expected. This trend indicates that future European fiscal policies will likely depend more on whether countries can simultaneously ensure economic growth recovery and energy resilience beyond mere austerity measures.