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Germany’s decision to ease fiscal rules and boost defence spending marks a “historic turning point” and a chance for Italy to revitalise its struggling manufacturing sector, according to the Italian industry minister.
Adolfo Urso told the Financial Times that Berlin’s new €1tn spending programme would stimulate growth not only in Germany but also in Italy, whose northern industrial regions are closely integrated with German manufacturers.
“It is a historic turning point,” Urso said of the German decision to relax its constitutional “debt brake” to allow a significant increase in defence spending. “It removes two taboos in one fell swoop: the taboo on debt, and the taboo on defence.”
Italian manufacturers could now shift to serve German and other European arms makers, set to benefit most from the investment drive, which also includes a €150bn fund launched by the European Commission.
“We must make the necessity of better defending the freedom of Europe an opportunity for development,” Urso said.
“We are preparing to turn the needs of Germany, Finland, Sweden, the Baltic countries and Poland and those who live on the eastern border of Europe into an opportunity of development for those of us who live on the southern border.”
The Italian economy has been hit by prolonged industrial stagnation in Germany — its largest export market. Italy’s national statistics agency, Istat, estimated this week that German sluggishness reduced Italian GDP by 0.2 per cent in both 2023 and 2024 due to weak exports.
Italy is Europe’s second-largest manufacturing economy, though many of its firms have struggled with rising energy and labour costs, weak demand, and cheaper rivals from China and other Asian economies.
The automotive industry — once the engine of Italy’s postwar economic “miracle” — has been hit particularly hard, and Urso said car parts makers were unlikely to recover unless they started diversifying.
“The automotive supply chain built for Italy and Europe cannot live on only with car orders,” he said.
The push to invest more in European arms makers comes as the continent readjusts following President Donald Trump’s overtures to Russia and threats to withdraw US troops and security guarantees from Europe.
“Europe will necessarily have to invest more in defence because the US will move its assets to other continents,” he said. “Italy is an industrial ecosystem primed for a diversification towards aerospace, underwater, shipbuilding and also the defence industry. These are sectors that can be developed significantly.”
Rome has been engaged in talks with Starlink, which is owned by Trump adviser and US billionaire Elon Musk, over a potential €1.5bn contract for secure government communications. But Urso said the Italian government would first carry out a feasibility study to see whether it could create its own constellation of low Earth orbit satellites and only then decide whether to opt for the US company.
Urso noted that there were more than 200 Italian companies already operating in the space sector, including as suppliers of components and services to major players.
The minister, who is a member of Prime Minister Giorgia Meloni’s party, said the government was seeking to prioritise what could be developed in Italy, or at least at a European level. “If I cannot do it with Europe, I do it with the west . . . They are not in conflict. Whatever is better and more convenient.”
Meloni has expressed ambivalence about Europe’s plans to increase defence spending, criticising Brussels for naming the initiative ReArm Europe. The premier is also wary of taking on more debt given her country’s heavily indebted public finances.
Italian public opinion, with its Catholic pacifist tradition, is also largely sceptical of rearmament. Pope Francis last week called for global disarmament from his hospital bed.
But Urso said Rome backed European “strategic autonomy’” — a term heavily promoted by France’s Emmanuel Macron since Trump’s first term in office.
“Since the beginning of our mandate, we have focused on European strategic autonomy,” Urso said, but added: “For us, our guiding light is the national interest.”
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