Italy approves new stimulus package to help virus-hit economy

Italy approves new stimulus package to help virus-hit economy
Girls wearing face masks walk past a sculpture by Canadian Artist Timothy Schmalz outside Santo Spirito hospital in Rome, Sunday, Oct. 18, 2020. (AP)
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Updated 19 October 2020

Italy approves new stimulus package to help virus-hit economy

Italy approves new stimulus package to help virus-hit economy
  • Among measures to support the health and education system, the government will set up a €4 billion ($4.7 billion) fund to compensate companies worst hit by coronavirus lockdowns

MILAN: Italy has approved a new stimulus package in its 2021 budget to foster an economic rebound from the recession caused by the coronavirus disease (COVID-19) pandemic, a government statement said on Sunday after a late-night Cabinet meeting.

The ruling coalition, led by the anti-establishment 5-Star Movement and center-left PD party, agreed on a preliminary version of the stimulus package, a government source said, leaving final details to be hammered out.

Among measures to support the health and education system, the government will set up a €4 billion ($4.7 billion) fund to compensate companies worst hit by coronavirus lockdowns.

The budget also extends temporary layoff schemes for companies with workers on furlough and offers tax breaks to support employment in the poor south of the country.

Italian Prime Minister Giuseppe Conte is expected on Sunday to also announce new measures to curb the steady spike in COVID-19 cases over recent weeks.

One of the European countries worst hit by the pandemic, Italy has forecast a 9 percent economic contraction for 2020 and a budget deficit equating to 10.8 percent of the country’s gross domestic product.

The expansionary package is expected to keep Italy’s deficit next year to 7 percent of economic output, up from a 5.7 percent forecast in April, reflecting the additional spending.

Italy has forecast economic growth of 6 percent in 2021.

Expansionary measures next year will total €40 billion, including cheap loans and grants from the European Union’s Recovery Fund, Gualtieri told lawmakers this month.