Italy: Draghi Cabinet Approves Long Awaited €32bn Support Package

Bank Note, Euro, Bills, Paper Money

It is still very much a multi-faceted emergency measure, hinging on monetary compensations to affected businesses and on the refinancing of the CIG short time work scheme and the redundancy ban. More action (and more deficit) to come soon.

Another omnibus emergency-type decree, worth a total of €32bn

The Draghi cabinet met Friday to approve the much-awaited decree, whose gestation has been lengthened but the occurrence of the government crisis. As it has been always the case with support packages released over the Covid-19 emergency, the current decree covers many areas: it is a mix of compensating measures, of employment protection extensions, of health-related new spending and of tax-related measures. It is worth a combined €32bn of extra deficit, already approved by the Italian parliament earlier this year. The “Supports” decree is meant to finance the sanitary emergency, to provide new monetary support to those parties most affected by anti-Covid-19 restrictive measures and give more breath to labour market safety nets.

Half of the money will finance vaccination and money compensations for businesses

In his inaugural speech PM Draghi had clearly set the health emergency as a top priority of his government, and the decree commits €5bn to fund the new strengthened vaccination plan. With the Astra Zeneca (the key supplier to the Italian vaccination plan) vaccine now re-admitted for administration, additional modalities will be introduced to speed up the pace of vaccination.

Monetary handouts meant to compensate businesses and self-employed workers are worth some €11bn. Here we note a discontinuity with previous practices: they will not be based on the Ateco activity code, but instead will benefit all businesses (with a 2019 turnover up to €10mn) who lost at least 33% of their average 2020 monthly turnover vs 2019; the percentage of restoration will be declining with turnover. Another part will finance the exemption from social contributions for self-employed and professionals.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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