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ECONOMY

Why has Italy been named ‘country of the year’ for 2021′?

Italy has been crowned the 'country of the year' by The Economist. Here's what this means and why the country took the top spot.

Italy has been named country of the year for 2021.
Italy has been named country of the year for 2021. Photo by Vincenzo PINTO / AFP

2021 has been nothing short of momentous for Italy – from winning the European cup to triumphing in the Eurovision song contest and claiming gold in the Olympics, the country has repeatedly stood out for its global achievements this year.

However, these aren’t the reasons Italy has been named ‘country of the year’ by global news magazine The Economist.

Instead, it’s taken first place for its politics.

READ ALSO:  ‘Do Italy just win everything now?’: Celebrations after Italian athletes take Olympic gold

“The Economist has often criticised Italy for picking leaders, such as Silvio Berlusconi, who could usefully have followed the Eurovision-winning song’s admonition to ‘shut up and behave‘,” writes the publication.

“Because of weak governance, Italians were poorer in 2019 than they had been in 2000. Yet this year, Italy changed,” it added.

It attributes Italy’s newfound economical success to the country’s leader since February 2021, Mario Draghi, who it described as “a competent, internationally respected prime minister”.

One distinguishing feature of Draghi’s success is said to be the national recovery and resilience plan, backed by EU funds.

“For once, a broad majority of its politicians buried their differences to back a programme of thoroughgoing reform that should mean Italy gets the funds to which it is entitled under the EU’s post-pandemic recovery plan,” reads the report.

Draghi unveiled the 222.1-billion-euro ($268.3-billion) programme back in April, pledging to address both the damage inflicted by Covid-19 and Italy’s long-standing structural issues.

The investment is part of the EU’s 750-billion-euro post-pandemic recovery fund – a figure that has now grown to €806.9 billion – intended for the whole bloc, with Italy set to be the biggest recipient.

READ ALSO:

The country intends to pump capital into economic recovery, job creation, research, public transport, the construction industry and renewable energy.

Another pillar of Italy’s acclaimed success in the ranking is its vaccination rollout, cited as one of the highest in Europe.

In another difficult year of the pandemic, countries in all corners of the globe have been put to the test with new variants, such as Omicron, and varying vaccine rollouts.

Some 85.2 percent of Italy’s eligible population over 12 years old have now been fully vaccinated, while over 13.6 million booster shots have already been administered, according to the latest official data.

In the graph below, Italy’s ranking doesn’t reflect the government’s figures as it has used different parameters to determine a full vaccination cycle.

However, it still ranks highly in Europe.

The report also stated that Italy’s economy is recovering after “a difficult 2020” and in fact, “more speedily than those of France or Germany”.

This is despite Italy’s public debt passing 155 percent of its GDP last year, with Brussels warning that it is still budgeting to spend too much next year.

However, Italy’s GDP rate grew by 2.6 percent in the third quarter of 2021 and ratings agency Standard & Poor has revised its outlook for Italian debt from stable to positive.

The Economist’s designation was welcomed by the Italian Embassy in the UK, who said they were “proud and delighted”  and would “toast to that with some Prosecco”.

Despite the positive developments, however, the report gave a word of caution about the new prime minister’s success: “There is a danger that this unaccustomed burst of sensible governance could be reversed. Mr Draghi wants to be president, a more ceremonial job, and may be succeeded by a less competent prime minister.”

Still for now, The Economist wrote, “It is hard to deny that the Italy of today is a better place than it was in December 2020.”

In fact, the annual accolade doesn’t go “to the biggest, the richest or the happiest,” but to the country that has made the biggest strides that year.

“Past winners have included Uzbekistan (for abolishing slavery), Colombia (for making peace) and Tunisia (for embracing democracy),” clarified the magazine.

It noted that many countries struggled in the challenging year of 2021.

“In many countries civil liberties and democratic norms were eroded,” reads the report.

They referred to the jailing of Russia’s main opposition leader, Donald Trump’s supporters storming the US political headquarters and the civil wars that took hold in Ethiopia and Myanmar.

“Yet amid the gloom, a few countries shone,” it added. It’s for this reason Italy was named ‘country of the year 2021’.

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MONEY

EXPLAINED: Why people in Italy might have to carry more cash from now on

Italian retailers will no longer face fines for refusing card payments on amounts lower than €60, after the government put the brakes on a recent push towards electronic payments.

EXPLAINED: Why people in Italy might have to carry more cash from now on

Italy’s new budget bill is set to add yet another controversial chapter to the country’s long and troubled history of card payment laws.

Under Italy’s new budget law, retailers will no longer be fined for refusing card payments for smaller amounts – a controversial move that is expected to have a knock-on effect for shoppers.

READ ALSO: Key points: What Italy’s new budget law means for you 

Fines for retailers refusing card payments on amounts lower than €60 will now be suspended until at least June 2023, according to a clause included in the text of the 2023 budget law published to media on Wednesday.

As set out by the bill, the six-month suspension will allow the newly created Ministry of Enterprises and Made in Italy to “establish new exemption criteria” and “guarantee the proportionality of the given penalties”.

And, though it isn’t yet clear what new exemptions the government is currently considering nor what exactly is meant by “proportionality”, what’s certain is that residents who had started to make more purchases by card will now have to repopulate their pockets with some good old banknotes because businesses – from taxi drivers to cafes and bars – might not accept card payments for small amounts.

Fines for businesses caught refusing card payments had been introduced by Draghi’s administration back in June 2022, with retailers liable to pay “a €30 administrative fee plus four percent of the value of the transaction previously denied”, regardless of the amount owed by the customer. 

Euro banknotes in a wallet

Under Italy’s new budget law, retailers will no longer be forced to accept card payments for transactions under €60. Photo by Ina FASSBENDER / AFP

The measure angered retailers who lamented having to pay hefty bank commissions on every electronic transaction – some business owners even went as far as openly defying the law and organised themselves into a protest group (Comitato No Pos, roughly meaning ‘Anti-point-of-sale committee’). 

Given the government’s new legislation, it seems like their efforts might just have paid off. 

But, while many business owners will no doubt be happy with the suspension, others have already raised doubts about the potential ripple effects of the government’s move.

Aside from shoppers having to carry more cash than they’re currently used to, many political commentators are warning that the suspension might be a “gift to tax dodgers” in a country where, according to the latest available estimates, tax evasion costs state coffers nearly €90 billion a year.

The same was said about another of the government’s recent changes: raising the cash payment limit from 2,000 to 5,000 euros.

READ ALSO: What’s changing under Italy’s post-pandemic recovery plan? 

A previous government led by Giuseppe Conte had introduced several measures aimed at encouraging the use of electronic payments, most of which have since ended or been rolled back.

The introduction of fines for businesses refusing card payments was one of the financial objectives set out within Italy’s Recovery Plan (PNRR), which expressly refers to the fight against tax evasion as one of the country’s most urgent priorities. 

It is therefore likely that the new cabinet will at some point have to explain the latest U-turn on Recovery Plan policies in front of the EU Commission.

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