Italy is set to receive less of an economic boost than originally forecast from European Union pandemic recovery funds, according to EU Commission data out on Wednesday.

This is despite Rome being one of the largest beneficiaries of the funding initiative.

Indeed, Rome is due to receive €194.4 billion from the Recovery and Resilience Facility (RRF) by 2026, which is more than any other state in absolute terms and only behind a few countries such as Romania, Croatia, Greece and Spain as a percentage of national output.

The funding received from the RRF is key to boosting Italy’s growth potential and revitalising the sluggish economy, according to successive governments. However, the Commission report forecast a smaller impact than Italy’s estimates, Reuters reports.

Italy’s GDP in 2026 will be just over 2.5 percentage points more than it would have been without the EU funding, according to the “mid-term evaluation” of the RRF by Brussels in a best-case scenario.

This is in comparison to a growth boost of around 3.5 points for Spain, which only benefits from a marginally higher amount of funding in GDP terms.

The latest official estimates for Italy have forecast a cumulative GDP rise of 3.4 points by 2026.

Aside from Greece and Spain, Italy’s growth boost is estimated to be less than Portugal, Bulgaria, Croatia and Romania.

Italy had struggled to spend EU cash as structural funds for the country’s poorer areas, even before the RRF.

Up to now, Italy has allocated more than €40 billion, which is under half of the €102 billion of secured RRF transfers, as per the government’s database.

Yet despite the cash inflows, Italy’s economy has stagnated over the past three quarters, with GDP falling 0.3% in Q2 2023 and rising 0.1% in Q3 and 0.2% in Q4.

For 2023 as a whole, Italy’s GDP increased around 0.7%, as per preliminary data, compared to a projected 2.5% growth in Spain.