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ECONOMY

Italy now a bright spot for foreign investors

Italy has leapt up eight places in a ranking of the world’s most attractive countries for foreign investment, mostly due to a revamp of its sclerotic labour market.

Italy now a bright spot for foreign investors
Italy has become more attractive to foreign investors. Photo: Kentee Gardin

Italy ranks 12th in the 2015 foreign direct investment confidence index by AT Kearney, the management consultancy firm, rising from 20th place last year.

The country, which is still grappling with one of the highest rates of unemployment in Europe, came ahead of sturdier economies including Switzerland, Sweden, the Netherlands and Denmark.

Despite weak growth in 2014, Italy “continued to attract high levels of investment”, the report said.

“In the face of a mounting unemployment crisis, the government worked to pass controversial labor market reforms under the Jobs Act that ease firing restrictions and address Italy’s rigid labor market.”

Foreign investors are also closely watching progress on other reforms being steered by premier Matteo Renzi, such as an overhaul of the public administration and judicial system.

Economy Minister Pier Carlo Padoan told reporters last week that the reforms would build the foundation for Italy’s long-term economic growth.

Investors have also been buoyed by recent deals between foreign and Italian companies, such as the acquisition of the household appliance firm Indesit by the US-based Whirlpool last year, and the merger between Alitalia and Abu Dhabi’s Etihad, which helped save the flagship carrier from bankruptcy.

Italy is also aggressively targeting Chinese business investors. More than 200 Italian companies are now in Chinese hands, AT Kearney said.

In March, China National Chemicals announced it would buy the tyre manufacturer Pirelli for $7.7 billion – one of the largest acquisitions by a Chinese state company.

Padoan said last week that the economy, which is expected to grow by 0.6 percent this year, is facing a “window of opportunity”, especially with an improvement in the macro-economic environment.

A reform clause in European Commission budget rules has given Italy, and other EU states in the midst of structural reforms, more room for new spending.

In April, the government said it had found €1.6 billion extra to spend this year by letting the national deficit rise slightly to 2.6 percent of GDP from 2.5 percent. The money will likely be spent on social initiatives.

Along with reforms, another priority is attracting more investment and helping businesses, especially when it comes to simplifying administration and improving access to finance for companies.

The US came first in AT Kearney's ranking of 25 countries, followed by China and the United Kingdom.

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MONEY

Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.

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