Conte Says Lockdown in Italy May Ease Earlier Than Planned

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(Bloomberg) --

Prime Minister Giuseppe Conte said he may further ease Italy’s lockdown earlier than planned, while urging the European Union to ensure that resources from a new recovery fund are available in the second half of the year to help the country’s devastated economy.

Conte, under pressure from coalition allies, regional and business leaders as well as public opinion after two months of containment measures to counter the coronavirus, told newspaper Corriere della Sera that ahead he sees “a sharp fall in GDP and the economic consequences will be very painful.”

Italy partially eased the lockdown on May 4, allowing manufacturing and construction companies to restart, with shops due to reopen on May 18. Bars, restaurants and barbers are scheduled to begin operating again on June 1, a date that may be brought forward.

“We’re gathering the data from the latest monitoring and with the experts we’re defining clear safety rules for workers and customers,” Conte said. “If the situation remains under control on the epidemiological level, we’ll be able to agree some earlier moves with the regions.”

Conte Says Lockdown in Italy May Ease Earlier Than Planned

Italy’s economy will shrink 9.5% this year, the European Commission said Wednesday. The government estimates output will fall 8%, while Bloomberg Economics sees a 13% contraction. An Ipsos survey published in Corriere on Saturday showed 58% of Italians want all economic sectors to restart as soon as possible.

Assistance from EU institutions is vital to limit the economic damage, including a European Commission proposal for a recovery fund jointly financed by member states.

“The resources must be brought forward through a bridge loan, a front loading which makes them available already in the second half of 2020, for those countries which are most affected by the pandemic,” Conte said.

The premier didn’t rule out resorting to credit lines linked to the European Stability Mechanism, which populists within and outside his coalition have portrayed as a sell-out to Brussels and carrying the stigma of the painful bailouts of the last decade.

Finance Minister Roberto Gualtieri told newspaper Il Messaggero that the government, which is preparing a 55 billion-euro stimulus package ($60 billion), will guarantee liquidity support “in the form of equity or hybrid capital instruments for medium-sized and big companies in difficulty.” Small firms will benefit from grants and rental discounts, he said.

Conte’s coalition faces a test as early as this week after Matteo Salvini of the anti-migrant League called for a parliamentary no-confidence vote in Justice Minister Alfonso Bonafede, who is under fire over mafia bosses being granted house arrest to limit the spread of the coronavirus in prisons.

Ex-premier Matteo Renzi, who leads a small coalition ally and has blown hot and cold on continuing to support the government, has yet to say how his party will vote. Conte said Bonafede would continue to serve as a minister “with his head high.”

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