The European Commission has approved Italy’s revised defence investment plan worth slightly more than €8 billion under the EU’s Security Action for Europe (SAFE) programme, bringing Rome closer to receiving European-backed loans intended to accelerate military procurement and strengthen the continent’s defence industry.
The decision was confirmed in Brussels on Tuesday, 13th October, by Commission spokesman Thomas Regnier, who said the updated Italian proposal had received the executive’s approval. The plan must now obtain the Council’s endorsement before the loan agreement can be signed and the first payment released.
Under the procedure outlined by the Commission, Italy would become eligible for an initial disbursement amounting to 15 per cent of its approved loan following completion of the remaining formalities. For a package worth approximately €8 billion, that would represent around €1.2 billion in initial financing.
The approval comes as European governments seek to translate commitments to increased military expenditure into procurement contracts, industrial production and operational capabilities.
Italy’s position in European defence industry
Italy is among the EU’s principal defence manufacturing countries, with substantial industrial capabilities in aerospace, naval construction, electronics, military vehicles and weapons systems.
Companies including Leonardo and Fincantieri occupy important positions in multinational defence programmes, while smaller manufacturers contribute specialised equipment, components and technologies.
The Commission has emphasised Italy’s industrial importance in explaining its support for the revised plan.
Nevertheless, approval of the financing proposal does not establish precisely how the money will be distributed among manufacturers or procurement programmes. Individual contractual arrangements will depend on the projects included in the approved national plan and the relevant purchasing decisions.
Italy had previously been associated with a substantially larger indicative SAFE allocation, but its updated application concerns approximately €8 billion.
The revised amount illustrates the distinction between the borrowing capacity initially made available to member states and the financing they ultimately seek through their national investment proposals.
How SAFE financing operates
SAFE was established in May 2025 as part of the EU’s wider effort to improve defence readiness following Russia’s full-scale invasion of Ukraine.
The programme provides up to €150 billion in long-term loans financed through borrowing by the European Union on international capital markets.
Unlike grants from the EU budget, these loans must be repaid by the borrowing member states. Their attraction lies principally in the financing conditions available through the Union’s borrowing arrangements.
SAFE is intended to support the procurement of equipment including ammunition, missiles, artillery systems, drones, air and missile defence systems, maritime capabilities and military mobility infrastructure.
An important feature is its emphasis on cooperation between European purchasers rather than exclusively national acquisition programmes.
Under the applicable regulation, joint procurement is generally intended to involve at least two eligible participating countries, although temporary provisions allow certain purchases by individual member states.
The rules also impose requirements concerning the geographic origin of components, reflecting the programme’s objective of increasing industrial capacity within Europe and eligible partner countries.
At least 65 per cent of component costs must originate within the permitted European and Ukrainian industrial base.
European production remains the central challenge
European governments have substantially increased defence expenditure, but higher budgets do not automatically resolve shortages in manufacturing capacity.
Production lines for ammunition, missiles and complex weapons systems require specialised machinery, skilled workers, component suppliers and sufficiently predictable orders to justify expansion.
Many defence companies have traditionally operated against fragmented national requirements. Different governments have purchased equipment in relatively small quantities, often imposing separate technical specifications and procurement conditions.
This fragmentation can increase costs and complicate maintenance, training and interoperability.
Brussels hopes that the combination of common financing and joint procurement will encourage member states to coordinate orders, giving manufacturers more predictable demand.
The challenge is particularly acute in air defence and precision-guided weapons, where European forces face both urgent requirements and lengthy production cycles.
SAFE can provide financing for eligible purchases, but the speed at which industry delivers equipment depends on existing capacity and the ability to expand production.
The next steps for Rome
Italy’s plan now moves to the Council, where the required approval must be secured before the Commission and Italian authorities can conclude the financing agreement.
The Commission’s statement on Tuesday made clear that the initial payment is conditional upon completion of these procedures.
Once the agreement is signed, the first tranche will provide financing for investment under the programme, with subsequent payments governed by the relevant arrangements.
The scale of Italy’s participation gives the decision significance beyond its immediate financial value.
As one of the EU’s largest manufacturing economies, Italy will be an important test of whether European defence financing can generate procurement cooperation across national borders while strengthening existing industrial capacity.
The effectiveness of the programme will ultimately be measured through signed contracts, production increases and the delivery of equipment to European armed forces, rather than the headline amount of approved borrowing.
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