Italy Government Signs Off on 55 Billion-Euro Stimulus Plan

(Bloomberg) -- Italy’s government approved a much-delayed 55 billion-euro ($60 billion) stimulus package to rescue an economy crippled by a two-month nationwide lockdown, promising a boost in liquidity for businesses and aid for families in need.

Prime Minister Giuseppe Conte held a cabinet meeting on the new spending measures after tensions within the ruling coalition forced repeated postponements for what was originally dubbed the “April decree.” Conte announced the new measures in a news conference Wednesday night.

The new spending -- amid containment measures to counter the coronavirus -- includes emergency income measures, extra funding for companies and tax cuts. Non-reimbursable grants for small and medium-sized companies will also be available.

“We’re confident that we will deliver the assistance even more quickly than we did until now,” Conte told reporters, responding to widespread protests by Italians who say aid pledged in an earlier March decree has yet to reach beneficiaries. “We haven’t overlooked the delay and we are trying to make up for it,” the premier said.

Key measures include the following, Conte said after the cabinet meeting:

• Some 26 billion euros for furloughed workers, freelancers and unemployment benefits
• So-called emergency income for workers trapped in the underground economy
• 15-16 billion euros for companies
  • That could include 4 billion euros in tax cuts for those with less than 250,000 euros in revenue via suspension of regional tax for companies
• About 3.25 billion euros for healthcare
• 1.2 billion euros for the food and agriculture sector
• 1.4 billion euros for schools, including hiring university researchers and teachers
• A holiday bonus of 500 euros for Italians with income below 40,000 euros

With the euro-area’s third-biggest economy laboring under lockdown, coalition allies and regional leaders -- especially in the hardest-hit North -- are pressing Conte to pick up the pace in easing restrictions.

Italy’s economy will shrink 9.5% this year, the European Commission said last week. The government estimates output will fall 8%, while Bloomberg Economics sees a 13% contraction.

The government will also earmark resources worth 3 billion euros to capitalize a planned state-controlled company to run failed carrier Alitalia, Transportation Minister Paola De Micheli said Monday.

New government rules include measures to ensure that banks can grant state-backed loans worth 25,000 euros to small companies in 48 hours, Finance Minister Roberto Gualtieri told La7 television after the government and banks blamed each other for delays.

Bitter clashes over a plan to grant temporary status to illegal immigrants, especially in the agricultural sector, and efforts to find resources to cover some proposed measures had led to delays in approval of the package. Conte has been trying to mediate between the parties in his government, including the anti-establishment Five Star Movement -- the coalition’s largest force -- and the small Italy Alive party of ex-premier Matteo Renzi.

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