Italian Prime Minister Giorgia Meloni during the Group of Seven (G7) Summit at the Pomeroy Kananaskis Mountain Lodge in Kananaskis, Alberta, Canada on June 17, 2025.
Geoff Robins / AFP
In Italy, small and medium enterprises—SMEs—are far from marginal: they employ over 13 million people and contribute more than two-thirds of the country’s value added. According to the European Commission’s 2019 SBA Fact Sheet, companies with fewer than 250 employees account for 78.1% of employment in the non-financial business economy and generate 66.9% of value added, well above the EU averages of 66.6% and 56.4%, respectively.
These numbers underline the strategic importance of SMEs: financing them is not a peripheral matter; it is a matter of national sovereignty. When capital flows to these companies via stable credit channels, they hire, invest, and export. When funding falters, the consequences hit employment, productivity, and ultimately the country’s control over its economic trajectory.
For decades, Italy’s financing model was unapologetically bank-centric. Local and regional banks, steeped in knowledge of their territories, served as the primary channel between savings and production. That relationship, based on continuity and trust, anchored the country’s industrial clusters.
Yet in recent years, a transformation has unfolded: Italy has developed a more sophisticated, diversified credit market, integrating new sources of private capital without surrendering control. The private credit segment, virtually non-existent a decade ago, has grown rapidly, from about €1.3 billion in 2020 to roughly €2.9 billion by 2023, and is projected to surpass €3.5 billion in 2025.
This evolution marks a quiet revolution. By complementing, not replacing, the traditional banking system, private credit has brought flexibility, innovation and resilience. Italy is proving that a nation can modernise its financial architecture without diluting its sovereignty: a lesson many larger economies could heed.
The same spirit of maturity now defines Italian companies abroad. Once seen primarily as acquisition targets, Italian firms have become confident acquirers. In 2024, outbound M&A transactions exceeded €18 billion, spanning sectors from renewable energy to high-tech components and luxury design.
This surge in cross-border activity underscores a structural change: Italian companies, supported by a more robust and sophisticated financing ecosystem, are investing beyond their borders on their own terms. National champions in machinery, green technology, and food processing are not merely defending domestic markets; they are exporting Italian capital, expertise, and brand power.
Such outward expansion strengthens sovereignty rather than weakening it. When domestic companies acquire abroad, the nation’s productive influence extends globally while its decision-making remains local.
Sovereignty in Europe is too often caricatured as resistance. But Italy’s experience reveals something subtler: a sovereignty of function, not isolation—the ability to direct credit toward national priorities while remaining open to the world.
European financial integration does not need to erase the particularities of national models. On the contrary, a Europe of sovereign economies, each rooted in its own productive traditions, is a Europe that can endure: the Italian case proves that integration and sovereignty are not enemies but allies.
A credit system that serves the nation’s productive base is strategic, as it gives a country the ability to weather crises without losing its industrial soul.
Economic sovereignty has also gained a new political dimension. Since taking office in October 2022, Prime Minister Giorgia Meloni’s government has combined fiscal prudence with a pronounced emphasis on national production and employment. The results are measurable.
Between late 2022 and early 2025, Italy added approximately 1.1 million new jobs, bringing total employment to 24.3 million—the highest in the country’s history. The employment rate climbed to 62.8% in January 2025, its best level since records began in 2004. In southern regions, long considered Italy’s Achilles heel, the employment rate crossed the 50% threshold for the first time, reaching a historic 6.5 million people employed.
At the same time, foreign investment has accelerated: between 2022 and 2025, Italy secured over €80 billion in new foreign investment commitments, reflecting rising international confidence in its political stability and pro-business reforms. The country’s deficit-to-GDP ratio has stabilised at 3.4%, while industrial output has outperformed the euro-area average in the first half of 2025.
These numbers are not abstract: they translate into sovereign capacity. When a government succeeds in aligning employment, investment and fiscal balance, it strengthens its negotiating power within Europe. The Meloni administration’s policies—ranging from simplified tax regimes for SMEs to targeted export guarantees through SACE and SIMEST—have restored consistency to Italy’s industrial strategy.
Perhaps the most important development lies in Italy’s evolving relationship with capital. The combination of domestic banking strength and expanding private credit has given SMEs new and multiple avenues of growth. Almost 30% of Italian private equity deals in 2024 employed private credit structures. Furthermore, international funds such as Ares Management have entered the market, signalling both confidence and opportunity.
This hybrid system, a ‘partnership’ between traditional banks and institutional investors, ensures that financing remains tied to productive activity rather than speculative cycles. It is, in effect, a ‘sovereign market capitalism’: open to global capital but governed by national purpose.
Italy’s progress carries lessons for Europe. The continent is once again debating sovereignty: this time in energy, technology, and finance. Italy’s experience shows that sovereignty and integration are not opposites but complements. A Europe of strong nations, each capable of directing its own productive capital, will be stronger collectively.
If Italy’s financing model can sustain vibrant SMEs, maintain record employment and attract international investment while retaining domestic control, it represents not merely a national success but a European asset.
For Europe, the message is clear: integration should not mean uniformity. The continent’s vitality depends on nations being able to sustain their own productive sovereignty. Italy’s model offers a blueprint that is financially sophisticated, politically stable, and proudly national.
