Meloni and Merz seek common ground on energy and deregulation ahead of March EU summit

Giorgia Meloni arrived at Alden Biesen castle with a dual objective: strengthen her partnership with German Chancellor Friedrich Merz and position herself as a central broker in the debate ahead of the 19–20 March European Council.

As co-host of the pre-summit, the Italian Prime Minister is not only shaping the agenda but also testing Italy’s ability to act as a bridge between northern fiscal caution and southern calls for industrial support. 

Seventeen countries are participating, including Emmanuel Macron’s France. Energy, automotive policy and regulatory simplification top the list. The common thread is competitiveness, a priority that cuts across political families and regional blocs.

A calibrated push on competitiveness

A draft package circulated ahead of the meeting outlines measures aimed at easing pressure on European industry. The focus is on lowering energy costs, streamlining regulation and ensuring that climate and industrial policies reinforce rather than undermine each other.

The informal document – a non-paper prepared jointly by Italy and Germany with Belgian backing – reflects a careful balancing act. 

Meloni’s role in drafting the text has been to keep the coalition broad: ambitious enough to respond to business concerns, but measured enough to avoid triggering resistance from more cautious capitals.

The paper avoids the most divisive proposals, notably new common borrowing to finance investment, an idea championed by Paris but viewed sceptically in Berlin and several northern member states. 

By sidestepping the issue, Meloni signals pragmatism and prioritises alignment with Merz over reopening entrenched fiscal battles.

At the same time, the text does not challenge core EU structures. There is no call to revise treaties, end unanimity or introduce sweeping “Buy European” provisions. 

The debate over an “emergency brake”

The most sensitive proposal is the introduction of an “emergency brake” mechanism on new regulatory burdens.

Under the concept, a Member State could request a pause during the legislative process if it considers additional obligations excessive. Supporters argue that such a tool would improve the quality of EU lawmaking and respond to long-standing complaints from industry about cumulative costs.

Critics warn that it could complicate decision-making and risk fragmenting the single market if used frequently or politically. Some diplomats note that the credibility of the proposal will depend on clear criteria and safeguards.

Italian officials insist the aim is not to dilute standards but to restore balance between environmental ambition and industrial competitiveness. 

Climate policy under review

The most consequential chapter concerns climate instruments. The EU emissions trading system (ETS) is due for revision in the third quarter of the year. Italy is seeking adjustments that safeguard national revenues while addressing competitiveness concerns for energy-intensive sectors.

Rome is also advocating refinements to the carbon border adjustment mechanism (CBAM), particularly to mitigate potential impacts on the steel industry. Here again, Meloni’s strategy is to present the changes as technical fine-tuning rather than a rollback of climate commitments.

More broadly, several governments, including Germany and Italy, are calling for a stricter application of technological neutrality in the automotive sector, giving manufacturers more flexibility in meeting decarbonisation targets while preserving investment capacity.

A fragile balance

For Meloni, the meeting carries domestic and European significance. At home, she can present herself as defending Italian industry and employment. In Brussels, she is seeking to reposition Italy from rule-taker to agenda-setter.

The initiative also allows her to consolidate ties with Berlin at a time when Franco-German dynamics are evolving. 

By engaging France within a broader group of 17 states, she avoids the perception of an exclusive axis while still anchoring the discussion in a Rome–Berlin partnership.

Divisions, however, remain. Some Member States stress fiscal prudence and regulatory stability. Environmental advocates caution against weakening long-term climate objectives. Former prime minister Mario Monti has warned that any perceived Rome–Berlin alignment must avoid creating new fractures within the Union.