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ITALY: More of the same

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The cabinet will approve, as early as this Friday, a EUR 32bn package of measures, including an extension of the ban on layoffs and of furlough schemes, alongside with fresh resources for income support, the health sector, and businesses hit by the pandemic. Most of the measures that will be part of the decree (called “Sostegni”) are not new but rather an extension of schemes and initiatives adopted by the previous government.

A month after the creation of a new government by Mario Draghi, a discernible policy shift has not yet materialized. The same is also true regarding the handling of the pandemic and the vaccination rollout, where apart from a different communication strategy not much else is changed.

For the time being, the arrival of Draghi has not produced substantial changes to the vaccination process, notwithstanding changes to the two top officials in charge of it. A speedier vaccination is officially a top priority, but lack of personnel, logistical issues and poor prioritization – and not supply shortages – continue to hamper efforts. Only a third of the 7 million vaccine doses administered so far have gone to people aged 70 or above, despite their increased vulnerability to coronavirus. Draghi has set a target of 500k daily vaccine injections – a distant goal as only 160-170K doses are currently administered every day.

Meanwhile, the situation on the ground is worsening. Italy recorded 502 Covid-19 deaths on 16 March, its highest daily number since late January. Experts fear that given the recent spike in hospitalizations, the daily death rate could stay above 300-400 people for some time. The latest numbers come as half of Italy's region entered a strict lockdown on 15 March. The ten regions in the so-called “red zone” (meaning all non-essential shops and schools are closed, bars and restaurants can only do takeaway services) will remain locked down until at least 6 April. All of Italy, except for Sardinia, will be a red zone for three days over Easter.

Likely key features of the decree “Sostegni”:

  • The package will be worth around EUR 32bn, which has been already budgeted by the previous government. The government is already considering a further stimulus, worth around EUR 20-30bn, that is expected to be unveiled in April/May.
  • The current ban on layoffs for economic reasons will be extended to 30 June.
  • Financial compensation for businesses with yearly turnover up to EUR 10 million who have had a 33% drop in revenues in 2020 compared to 2019. The potential beneficiaries are around 2.8 million, including firms and self-employed workers. Estimated cost is EUR 12bn.
  • Around EUR 5-6bn will be allocated to the health system to accelerate vaccinations and for Covid-19 treatment.
  • Around EUR 10 bn will be used to finance furlough schemes (CIG) and unemployment support (Naspi), provide more resources for the citizenship income and pandemic related income-support for low-income families.
  • Local and regional government entities will be granted around EUR 2.5bn, mainly to strengthen their public transport services.
  • Scrapping of old tax payment notices (max value EUR 5,000) issued by the revenue agency between 2000-15. The estimated cost is around EUR 2bn.
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ITALY: More of the same

The cabinet will approve, as early as this Friday, a EUR 32bn package of measures, including an extension of the ban on layoffs and