From 2022 to 2025, the Italian state collects more, spends more cautiously and narrows the gap: the new balance of Italy’s public finances according to Unimpresa
Table of Contents
- Italy’s public finances are changing shape
- Record tax revenue makes 2025 a symbolic year
- Spending rises, but more slowly than revenue
- The deficit shrinks, but it does not disappear
- From pre-Covid levels to a new fiscal normal
- Paolo Longobardi: stronger accounts in a more unstable world
- The less visible side: stronger finances, heavier tax dependence
- More credible public finances, but still far from full balance
Italy’s public finances are changing shape
One figure explains the recent trajectory of the Italian economy better than many political slogans: between 2022 and 2025, government revenues increased faster than expenditure. That is the central finding of the analysis released by Unimpresa, based on reworked Bank of Italy data, which describes a four-year period of gradual fiscal rebalancing after the extraordinary years marked by the pandemic and the energy crisis.
In 2022, total government revenue stood at 632.2 billion euros. By 2025, it had risen to 708 billion. In absolute terms, that means an increase of 75.9 billion euros, or 12%. The picture becomes even more significant when looking at the most important component of the budget: tax revenue. Tax receipts rose from 528.1 billion to 614.2 billion euros, jumping by 86.1 billion, or 16.3%.
Not every revenue category moved in the same direction, however. Other revenues fell from 104.1 billion to 93.8 billion euros, a decrease of 10.3 billion. This means the strengthening of Italy’s public finances increasingly relies on ordinary taxation and on the state’s ability to collect taxes more steadily and more effectively.
Record tax revenue makes 2025 a symbolic year
The year 2025 marks a particularly important turning point: tax receipts reach 614.2 billion euros, the highest level in the historical series considered. This is not just an impressive number. It is also a major economic and political signal.
On one hand, the result suggests a stronger and more resilient fiscal system. On the other, it raises an unavoidable question: how much of this improvement comes from real economic expansion, and how much from a heavier burden on households and businesses? The report points to a mix of factors: post-pandemic recovery, inflation expanding tax bases, stronger tax collection and more effective anti-evasion policies.
The essential point is clear: the consolidation of Italy’s public finances is being driven mainly by strong growth in ordinary tax revenue. That is good news for budget sustainability, but it is less neutral when viewed from the perspective of those who actually pay those taxes.
Spending rises, but more slowly than revenue
The improvement in the budget balance is not the result of a dramatic cut in public spending. Instead, it comes from spending growing at a slower pace than revenue. Between 2022 and 2025, total expenditure rose from 781.5 billion to 845.1 billion euros, an increase of 63.5 billion, equal to 8.1%.
More specifically, current spending increased from 641.1 billion to 696.7 billion euros, up 55.6 billion (+8.7%). Capital expenditure rose from 140.5 billion to 148.4 billion euros, up 7.9 billion (+5.6%). In other words, spending is still rising, but it is doing so more moderately than revenue.
The year 2025 adds another interesting detail. Compared with 2024, total spending remains virtually unchanged at 845.1 billion euros. Yet beneath that apparent stability there is an internal shift: current expenditure continues to rise while capital expenditure declines. So this is not a broad-based reduction in public spending, but rather a reshuffling within the budget structure itself.
The deficit shrinks, but it does not disappear
The most politically sensitive figure is the deficit. In 2022, the gap between revenue and expenditure was negative by about 149 billion euros. In 2025, that negative balance falls to roughly 137 billion. The improvement therefore exceeds 12 billion euros.
This is not yet a return to balance, let alone a surplus. But it is the clearest sign that Italian public finances, while still burdened by a structurally high level of expenditure, are gradually emerging from the long aftermath of the emergency years. The medium-term trend is unmistakable: revenues are increasing almost twice as fast as spending, and the red ink is narrowing.
That becomes even clearer when compared with the hardest years. In 2020, during the pandemic, the state budget suffered a real fracture: tax revenues fell to 432.6 billion euros while total expenditure surged to 724.2 billion, pushing the deficitto nearly 228.6 billion euros. In 2021 the deficit remained close to 220 billion. The following four years therefore tell the story of a slow but tangible normalization.
From pre-Covid levels to a new fiscal normal
The Unimpresa analysis does not stop at the 2022–2025 comparison. It reconstructs the entire path of the state budget from 2016 to 2025. And this broader view reveals the most interesting picture of all: Italy has not returned to pre-pandemic levels. Instead, it has built a new structural scale for public finances, larger and more expensive than before.
In 2016, total revenue stood at 502.4 billion euros. By 2025, it exceeds 708 billion. Expenditure, net of interest payments, amounted to 544.3 billion in 2016 and reaches 845.1 billion in 2025. This means that even after the emergency phase ended, the Italian state continued to operate on a much larger scale than in the past.
That point deserves careful attention. On one hand, it signals the persistence of a more interventionist, more present and more costly public sector. On the other, it confirms that Italy has absorbed into its ordinary fiscal structure a large part of the expansion that took shape during the health and energy crises.
Paolo Longobardi: stronger accounts in a more unstable world
Paolo Longobardi, president of Unimpresa, reads these figures as a reassuring sign. In his view, Italy is now in a phase of consolidation after the shocks of recent years and enjoys more stable public finances just as the international environment grows more uncertain again.
The reference is to geopolitical tensions, including the conflict involving Iran, which could generate new shocks across the global economy. In that context, a more orderly state budget is not just a bookkeeping achievement. It becomes a reserve of credibility, a source of confidence and a potential cushion for future intervention.
The logic is straightforward: when public finances improve, a country can face external shocks with greater calm. That does not mean problems disappear, but it does mean the state is less fragile and has more room to respond.
The less visible side: stronger finances, heavier tax dependence
There is, however, a less celebratory reading that the report implicitly suggests and that deserves attention. If the improvement in the budget balance is mainly based on rising tax receipts, then part of the adjustment is clearly passing through the tax system.
That does not automatically mean higher tax rates, but it does mean taxation is playing an increasingly central role in restoring balance. This raises a delicate issue: how long can stronger tax revenue continue without affecting the spending power of households and firms? It is a crucial question, especially at a time when economic growth is not yet strong enough to offer unlimited room for maneuver.
The political risk is evident. A stronger budget is good for the country, but it becomes truly positive only if consolidation does not turn into excessive pressure on the productive system. That will be the real challenge in the months ahead: maintaining improved public finances without suffocating growth.
More credible public finances, but still far from full balance
The message emerging from the Unimpresa study is twofold. On one side, the figures show that Italy has entered a credible path of fiscal consolidation. On the other, they show that the process is not finished and that rebalancing remains incomplete.
The year 2025 delivers a better picture than previous years: record tax revenue, rising overall income, stable expenditure and a narrower deficit. But it also delivers a less comfortable truth: Italy’s state budget still operates at very high spending levels, and its strengthening increasingly depends on the resilience of tax collection.
That is where the real challenge lies. Not only in the balances themselves, but in the quality of the improvement. Because more orderly accounts matter, but they become a true success only when they can coexist with growth, investment and confidence.
This post is also available in: Italiano (Italian)