Duomo's cathedral and Porta Nuova's financial district are seen in Milan, Italy, May 16, 2018. REUTERS/Stefano Rellandini

ROME (Reuters) -Italy plans to increase its borrowing by 12 billion euros ($14 billion) between 2026 and 2028, slowing the reduction of the deficit to allow measures including tax cuts for middle-income earners, the Treasury showed in its multi-year budget plan.

The government has targeted the deficit to fall to 2.8% of gross domestic product (GDP) in 2026 from 3% this year, dipping to 2.6% in 2027 and 2.3% the following year.

Were policy to remain unchanged, Italy's fiscal gap would be on course for slightly lower deficits of 2.7% in 2026, 2.4% in 2027 and 2.1% in 2028.

That gives the government room to borrow about 2.3 billion extra euros in 2026, rising to 4.8 billion in 2027 and 4.9 billion in 2028, according to the new budget plan.

($1 = 0.8521 euros)

(Reporting by Giuseppe FonteEditing by Peter Graff)