Italy Extends Worker, Business Protection to Avoid Cliff Edge

(Bloomberg) --

The Italian government has approved its latest bundle of coronavirus related norms aimed at supporting businesses and workers damaged by the coronavirus pandemic.

The measures known as “August decree” include tax breaks for small and medium-sized businesses and companies that hire in Southern Italy, an extension of one-off payments for tourism and entertainment industry workers, money for the healthcare sector, an extension of furlough and a ban on collective layoffs until the end of the year, Italian Prime Minister Giuseppe Conte said during a press conference in Rome.

“We won’t divide Italy in half, we want to help the more disadvantaged areas to recover,” Conte said.

Italy is under pressure to increase spending to try to spark a recovery following months of lockdown that have crippled its economy. The government is trying to avoid a cliff-edge scenario where businesses and workers are left without financial support while still fragile.

Total stimulus for the economy has reached 100 billion euros Conte said. That’s from an initial 75 billion euros-worth of measures approved during and immediately after the pandemic, plus a further 25 billion euros approved last month that will help finance the new measures.

Other norms passed today include 500 million euros to support the auto sector, Conte said.

The economy is set to contract 11%, according to European Commission forecasts, which will push the country’s mammoth debt well over 150% of output.

For now, Italy is benefiting from the European Central Bank’s emergency bond-buying program which is containing its borrowing costs. The country is also expected to receive the biggest share of a 750 billion-euro recovery fund approved by the EU last month. Conte said at the time that total funding from the EU will be 209 billion euros in grants and loans.

The government also announced an extension of some coronavirus containment norms such as the need to maintain social distancing and wear masks. The Prime Minister said the situation is “stable” and he isn’t planning new restrictions on citizens, but asked Italians, particularly the younger generations, to respect basic rules.

©2020 Bloomberg L.P.