Europe's news in English

COPY LINK

HEALTH

Italy earmarks €400 billion to help businesses through coronavirus crisis

Italian Prime Minister Giuseppe Conte on Monday announced a new stimulus programme designed to inject up to €400 billion into businesses damaged by the coronavirus pandemic.

Published: 6 April 2020 21:50 CEST

Italy earmarks €400 billion to help businesses through coronavirus crisis

Closed shops in Lombardy, northern Italy. Photo: Miguel Medina/AFP

Conte told the nation in a television address that the measure represented “the most powerful intervention in the country's history”.

The programme will add to the €340 billion in government-backed loans announced last month.

READ ALSO:

Conte said half of the new package will be earmarked for export-oriented companies whose turnover has imploded over the past month.

He told the nation to be patient in the face of a pandemic that has now officially claimed 16,523 lives and left millions at least temporarily unemployed.

“We will soon see a new spring for Italy but for the moment we must stay at home,” the Italian leader said.

Italy's health “emergency is also an economic and social one,” Conte said.

The government also announced that it will take steps to protect Italian companies weakened by the economic crisis from being taken over by foreign competitors.

“This moment of difficult will not translate into an opportunity to prey on Italian companies,” cabinet undersecretary Riccardo Fraccaro said.

Member comments

Log in here to leave a comment.

Become a Member to leave a comment.

France and Italy face spending rebuke from EU

The rebuke comes at a particularly difficult moment for France, where both the far left and far right are piling up spending promises ahead of snap polls triggered by President Emmanuel Macron’s crushing EU election defeat.

This will be the first time Brussels has reprimanded nations since the EU suspended the rules because of the 2020 Covid pandemic and the energy crisis triggered by Russia’s invasion of Ukraine, as states propped up businesses and households with public money.

The EU spent two years during the suspension overhauling budget rules to make them more workable and give greater leeway for investment in critical areas, like defence.

But two sacred goals remain: a state’s debt must not go higher than 60 percent of national output, with a public deficit – the shortfall between government revenue and spending – of no more than three percent.

The European Commission will publish assessments of the 27 EU states’ budgets and economies on Wednesday, and is expected to point out that some 10 countries including Belgium, France and Italy, have deficits higher than three percent.

The EU’s executive arm has threatened to launch excessive deficit procedures, which kickstart a process forcing a debt-overloaded country to negotiate a plan with Brussels to get back on track.

Such a move would need approval by EU finance ministers in July.

Countries failing to remedy the situation can in theory be hit with fines of 0.1 percent of gross domestic product (GDP) a year, until action is taken to address the violation.

In practice, though, the commission has never gone as far as levying fines, fearing it could trigger unintended political consequences and hurt a state’s economy.

The EU countries with the highest deficit-to-GDP ratios last year were Italy (7.4 percent), Hungary (6.7 percent), Romania (6.6 percent), France (5.5 percent) and Poland (5.1 percent).

They may face the excessive deficit procedures, alongside Slovakia, Malta and Belgium, which also have deficits above three percent, according to Andreas Eisl, expert at the Jacques Delors Institute.

The picture is complicated for three other countries, Eisl said. Spain and the Czech Republic exceeded the three percent limit in 2023 but should be back in line this year.

Meanwhile, Estonia’s deficit-to-GDP ratio is above three percent – but its debt is around 20 percent of GDP, significantly below the 60 percent limit.

The commission will look at the states’ data in 2023 but “will also take into account the developments expected for 2024 and beyond”, the expert told AFP.

Member states must send their multi-annual spending plans by October for the EU to scrutinise and the commission will then publish its recommendations in November.

Under the new rules, countries with an excessive deficit must reduce it by 0.5 points each year, which would require a massive undertaking at a moment when states need to pour money into the green and digital transition, as well as defence.

Adopted in 1997 ahead of the arrival of the single currency in 1999, the rules known as the Stability and Growth Pact seek to prevent lax budgetary policies, a concern of Germany, by setting the strict goal of balanced accounts.

Url copied to clipboard!