Italian government approves $38bn package for virus-hit economy

Stimulus provides for unemployed workers and Covid-19 vaccination efforts

Italy's Economy Minister, Daniele Franco and Italy's Prime Minister, Mario Draghi stand after holding a joint press conference with Italy's Minister for Labour and Social Policy, following a Cabinet meeting in Rome, Italy, March 19, 2021. Alberto Pizzoli/Pool via REUTERS
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Italy's government on Friday approveda €32 billion ($38bn) economic relief package for coronavirus-stricken businesses and workers.

It included €11bn of grants to the worst-affected companies that will be paid out by the end of April, Prime Minister Mario Draghi said.

Mr Draghi called the decree a "partial answer" to those who are struggling with the fallout from the pandemic, "but the best that we could do" given budgetary constraints.

Around €8bn was earmarked for welfare support, including for furloughed and unemployed workers, and almost €5bn for vaccinations and the health sector.

A freeze on job dismissals, due to expire in late March, was extended until the end of June, or until late October for some industries.

The measures were funded by public debt, and Mr Draghi said the government would borrow even more this year to finance more economic stimulus measures.

Friday's decree included an amnesty on unpaid tax bills, which was championed by Matteo Salvini's far-right League and opposed by leftists in the national unity coalition.

There were other measures for categories badly affected by mandatory shutdowns – including seasonal workers, theatre and cinema employees and the ski industry.

Italy, which 13 months ago became the first European country to be hit by the coronavirus pandemic, has been plunged into its worst recession since the Second World War.

Last year, gross domestic product fell by 8.9 per cent, while almost 450,000 people lost their jobs, with disproportionately high numbers among women, young people and the self-employed.

Mr Draghi is hoping to provide some relief by ramping up a sluggish vaccination programme and is drafting an economic relaunch plan to be funded by EU grants and loans.

Italy is eligible for around €200bn from the bloc's flagship virus recovery fund, but in return, it has to commit to an ambitious reform plan, subject to Brussels approval.

Huge expectations are riding on Mr Draghi, a former European Central Bank president famous for doing "whatever it takes" to save the euro, who became Italy's premier in February.

Since then, he has mostly worked behind the scenes, attracting some criticism. Friday marked his first news conference in more than a month in office.