Italy's Quiet Growth Meets Its Loudest Bill: Energy

Italy's economy is not in crisis. That is the first thing the numbers say. The World Bank's growth figure for 2025 is 0.54 percent — expansion, not contraction, and enough to keep employment rising. Unemployment stands at 6.39 percent, a level that would have seemed implausible to anyone who lived through the eurozone's long stagnation. Inflation at 1.53 percent is close to the European Central Bank's target and well below the double-digit peaks of the energy shock years.

The currency tells a similar story of stability. The ECB's reference rates for 17 September put the euro at 1.1481 dollars, 0.8583 pounds, 178.75 yen, 7.7009 yuan and 0.9466 Swiss francs. Over the past month the euro has drifted from 1.1605 dollars to 1.1481 — a decline of roughly one percent, unremarkable in foreign-exchange terms and far from the existential swings that once defined the Italian story in the international press.

Yet the foreign coverage of Italy this week is not about growth. It is about bills. The Local Italy reported on Thursday that consumer groups are warning of another spike in energy costs this autumn, and asked why Italian households pay more for electricity than their neighbours in France, Germany or Spain. That question has a structural answer: Italy generates a smaller share of its power from nuclear and hydro than its northern neighbours, relies more heavily on imported gas, and carries grid and levy costs that land on the retail tariff.

The same outlet reported that from 2027 the owners of roughly 70 percent of vehicles on Italian roads will no longer pay the annual road tax. On its face this is relief for households squeezed by fuel and insurance costs. Read against the energy story, it is a puzzle. A government that says it wants to reduce the burden on families is removing a revenue stream that funds regional road maintenance, at a moment when the broader fiscal picture — a public debt burden that has been the subject of international commentary for three decades — leaves little room for unfunded generosity.

That tension is the real Italian economic story of the moment, and it is not unique to Italy. Across the eurozone, governments that spent heavily to shield households from the 2022 energy shock are now deciding which supports to keep and which to withdraw. Italy's choice — cut the motoring tax, tolerate high power prices — is a political one, and the world's business press will judge it by whether it lifts consumption or simply shifts the cost to regional budgets.

There is a wider context the wire makes plain. Canada's prime minister, Mark Carney, used a speech to the European Parliament this week to pitch a "new alliance" with Europe as a bulwark against outside pressures, and the European Commission president, Ursula von der Leyen, raised the prospect of Canada becoming the bloc's first associate member. For an exporting economy like Italy's, closer EU trade architecture is not an abstraction; it is the difference between selling into a protected continental market and competing tariff by tariff.

The euro's recent softening against the dollar, modest as it is, cuts both ways for Italian manufacturers. A weaker euro makes exports more competitive in dollar terms — helpful for the machinery, fashion and food producers of the north. It also raises the cost of the energy Italy imports, which feeds directly into the autumn bills that consumer groups are already warning about. The exchange rate and the electricity tariff are, for Italy, two ends of the same rope.

None of this amounts to a crisis narrative, and it should not be reported as one. Growth is positive, inflation is contained, unemployment is low by the standards of the past two decades. The question the data and the foreign coverage together pose is narrower and more durable: whether an economy of roughly 59 million people, ageing and dependent on imported energy, can convert modest growth into the investment that lowers its power bills and its debt. On the evidence of this week, that conversion has not yet begun.