MILAN — Italy’s government is working to release the latest aid package — or Relaunch Decree, as it has been dubbed — this week, possibly on Tuesday, rumored to allocate 55 billion euros and meant to support the country’s families and companies grappling with the effects of the coronavirus pandemic.
The relief is much needed, as Italy has been in lockdown since March 9 and all industries have been heavily impacted by the health and economic crisis.
On Monday, Italy’s National Institute for Statistics ISTAT said the country’s production was down 29.3 percent on an annual basis, net of the effects of the calendar.
Italy’s industrial production in March was down 28.4 percent compared to the previous month. In the first quarter, production decreased 8.4 percent compared with the previous three months.
This is not surprising given the lockdown, which has been eased since May 4, allowing production, business-to-business operations and construction to restart, in compliance with safety protocols.
The curve of the infection has been decreasing steadily, with 0.3 percent growth in contagions as of May 11 compared to the previous day, according to the Civil Protection. However, Prime Minister Giuseppe Conte has urged caution to avoid another outbreak. The lockdown will be further eased on May 18 when retail businesses will be allowed to reopen, as well as museums, exhibitions and libraries. Another phase will see bars, restaurants, hair salons and beauty centers reopen on June 1.
According to ISTAT, the textile, clothing, leather and accessories industry was among the most affected in March, showing a 51.2 percent decrease in production. By sector, it was the second most hurt by the pandemic and the lockdown, following a 52.6 percent drop reported by the transportation segment. The food, drinks and tobacco industry suffered the least, down 6.5 percent.
Lombardy, Veneto and Emilia Romagna are the three regions most impacted by the pandemic and they account for 45 percent of Italy’s gross domestic product. The Italian government has said it expects an 8 percent contraction in GDP in 2020, which could fall to 10 percent if the virus persists.
The lockdown has clearly been hurting the retail sector and Marco Barbieri, general secretary of association Confcommercio Milano, said in an interview that 25 percent of stores in Milan and its province are at risk of closing down for good.
The association’s study showed that 22,700 local companies in the trade, tourism and service sector are closed because of the lockdown in Milan and the province. These count 123,000 employees and of these, 43,000 are supposed to be helped by Italy’s “Cassa Integrazione” wage support measure. However, “92 percent of them have not seen a cent from the government yet, which means the companies have had to advance the money,” said Barbieri. The crisis has hurt all sectors, but the most impacted were the clothing stores, restaurants and bars, he added.
In a Confcommercio survey, liquidity arose as one of the most pressing issues as 95 percent of 1,800 respondents said they had not received any cash yet, and 80 percent lamented a lack of support by the banks. Asked if they think they will reopen at the end of the lockdown, 80 percent said they would want to but between 70 and 80 percent are doubtful about the future, noted Barbieri. One key issue is that the safety protocols, requiring distance, will force most to work at 50 percent of their capacity.
“We are asking the government for straight grants, a tax reprieve at least until the end of December and not only postponed until June,” said Barbieri, expressing his hopes in the new government decree. Confcommercio has also asked for a tax break on advertising, rents and occupation of public grounds. “This is an emergency, so timing is of the essence, things must be done quicker and bureaucracy must be streamlined.”
As reported, in March the government pledged to allocate 25 billion euros and take action to generate financing for 350 billion euros “as part of the “Cure Italy” initiative. Last month, the prime minister unveiled a new “firepower” decree that would provide immediate cash for 400 billion euros to Italian companies of all sizes, of which 200 billion euros will support exports, with the state and the government acting as guarantors for the loans.