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Draghi Takes on Italy’s Red-Tape Tangle to Reboot Economy

Draghi Takes on Italy’s Red-Tape Tangle To Reboot Economy

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Prime Minister Mario Draghi is trying the near impossible: to reboot Italy’s ailing economy after decades of stagnation.

To do so he’ll have to overcome bureaucratic and political hurdles that stymied many of his predecessors. While Draghi has nearly 200 billion euros ($232 billion) of EU recovery fund cash to kick start his plans, his true challenge will be structural reforms.

Here’s a closer look, illustrated by charts, at what he’s up against:

Draghi Takes on Italy’s Red-Tape Tangle to Reboot Economy

Italy’s current civil and commercial justice procedures are among the slowest in Europe. That’s been a contributing factor discouraging businesses from moving to or investing in the country. 

Draghi Takes on Italy’s Red-Tape Tangle to Reboot Economy

The government is also trying to slim down the country’s mammoth bureaucracy whose red tape discourages potential entrepreneurs. Italy lags its western European peers when it comes to competitiveness, according to international rankings.

Draghi Takes on Italy’s Red-Tape Tangle to Reboot Economy

Another key point is fiscal reform, part of the government’s new plan. Finance Minister Daniele Franco said earlier this week that labor taxes and company taxes are well above European averages.  

Draghi Takes on Italy’s Red-Tape Tangle to Reboot Economy

If Draghi really wants to jump start the Italian economy, he has to tackle the country’s chronically sluggish southwestern regions. The government is putting 40% of EU recovery funds into infrastructure, health, education, green and digital projects in the area.

“Draghi can succeed, but we ought not underestimate the troubles ahead,” said Giovanni Orsina, director of the School of Government at Luiss-Guido Carli University in Rome. “Italy has been struggling for decades with low economic growth and the inability to enact effective reforms.”

©2021 Bloomberg L.P.