Italy agrees on $4.7bn fund to compensate companies during COVID-19 pandemic

Lucy Harley-McKeown
·2-min read
Italy's Prime Minister Giuseppe Conte arrives for day two of an EU summit in Brussels, Belgium October 16, 2020. Olivier Hoslet/Pool via REUTERS
Italy's Prime Minister Giuseppe Conte arrives for day two of an EU summit in Brussels, Belgium. Italy confirmed it has pushed through a new stimulus package. Olivier Hoslet/Pool via Reuters

The Italian government has moved to approve a new stimulus package to support its economic rebound from the COVID-19-induced recession, it said on Sunday.

Among other measures, the package is to include a €4bn ($4.7bn, £3.6bn) fund to help companies worst hit by lockdowns throughout the country.

After late-night cabinet deliberations on Saturday, the ruling coalition agreed a preliminary deal for its 2021 budget, a source told Reuters, with finer details of the deal to be confirmed at a later date.

The deal will offer tax breaks to help employment in the poor south of the country, and extend temporary lay-off schemes for companies with furloughed workers.

The Italian government is among others in Europe struggling to contain the economic fallout from the pandemic. The UK also recently moved to extend job support schemes in order to mitigate against a cliff-edge when help runs out at the end of October.

The Italian prime minister Giuseppe Conte is on Sunday also expected to announce new measures to curb a second wave of the virus. Like other countries, Italy’s caseload has spiked in recent weeks.

READ MORE: Markets to focus on US presidential debate, global manufacturing PMIs and China data

Italy was one of the first European countries to go into lockdown, as it faced a devastating spike in cases early on. It has forecast a 9% economic contraction in 2020. In 2021, it expects its economy to grow by 6%.

Italy’s budget deficit currently equates to 10.8% of gross domestic product (GDP).

The most recent round of support follows a €55bn package approved in May.

The package was long-delayed, as Conte had promised to introduce the measures in April, but repeated rows within his increasingly shaky coalition over various aspects of the decree, which ran to almost 500 pages, led to repeated holdups.

WATCH: What is a recession?