The underground and illegal economy is worth 218.2 billion: that is 9.9 per cent of GDP. Undeclared work is on the rise

‘The slight reduction in the overall share of the informal economy in value added – falling from 10.3 per cent in 2023 to 10 per cent in 2024 – is, as Istat points out, the result of varied sectoral trends. For example, there has been a decline in the informal economy in many sectors, particularly in ‘Other personal services’ (-0.9 percentage points compared with 2023). Increases, on the other hand, are recorded in Construction (+1.2 percentage points, following three years of significant reductions), in Professional services (+0.4 percentage points) and in Agriculture (+0.2 percentage points).’

The figures on construction are particularly thought-provoking, as they come in a year (2024) in which the strong boost provided by the ‘maxi-bonuses’ for building work has begun to wane (with the resulting impact on public finances), and it will be interesting to see how 2025 unfolds: the year in which the tax relief for renovation and energy-saving works has been reduced to 50 per cent for work on main residences and 36 per cent for second homes.

The component attributable to under-reporting accounts for a significant proportion of ‘Other personal services’ and ‘Construction’, where in both cases it represents 10.8 per cent of the sector’s value added, in Trade, transport, accommodation and catering (10.7 per cent) and in Professional services (10.3 per cent). The phenomenon is, however, more limited in Education, health and social care (3 per cent), in the production of capital goods (2.7 per cent), in Other business services (2.5 per cent) and in the production of intermediate goods, energy and waste (0.5 per cent).

As previously mentioned, in 2024 the value added generated by illegal activities is estimated at 19.8 billion euros, corresponding to 0.9 per cent of GDP. This figure includes the associated economic impact, that is, the value of legal goods and services used in illegal production processes. There has been a decrease of €0.2 billion in the value added generated by illegal activities. Final consumption of illegal goods and services has also fallen slightly, standing at €22.5 billion, equivalent to 1.7 per cent of total final consumption expenditure.

With regard to the period 2021–2024, illegal activities show an increase of 1.3 billion euros in both value added and final consumption expenditure, with an average annual growth rate of 2.2 per cent and 1.9 per cent respectively.

In 2024, drug trafficking saw a slight decline: value added fell to 14.9 billion euros (down 0.4 billion compared with 2023), whilst expenditure on consumption stood at 16.8 billion (down 0.4 billion compared with 2023).

During the same period, the National Institute of Statistics notes, ‘the prostitution sector showed moderate growth’. In 2024, both value added and final consumption rose by 2.8 per cent (reaching 4.2 and 5.0 billion euros, respectively).

Istat also points out that ‘cigarette smuggling remains marginal’: of all illegal activities, it accounts for 3.1 per cent of value added (€0.6 billion) and 3.2 per cent of household consumption (€0.7 billion).

Over the period 2021–2024, the economic impact associated with illegal activities – primarily attributable to the transport and warehousing sectors – remains steady at around 1.4 billion euros.