COVID-19: Focus on Italy
An overview of the situation in Italy, with regards to the Covid-19 contagion spread and the Government’s response. You will find:
- A timeline of the major events that marked the contagion spread and the measures taken by the Government
- An overview of the measures taken to support the economy during the lockdown period
- State of play of the lockdown of manufacturing sites and estimated impact on the economy
- The latest available data on the contagion spread (as of 02 April)
22 January 2020
Ministry of Health Guidelines to healthcare units: patients to be tested for coronavirus include those showing symptoms of severe acute respiratory infection who have also visited China in the 14 days before the symptoms or have been in contact with someone who has.
All direct incoming flights from China, Hong Kong, Macau and Taiwan suspended. Still no measure in place to test and place in quarantine those arriving from other countries after visiting China.
8 February (until 22 February)
The Ministry of Health runs an ad on national TV channels where a well-known actor says that “the contagion spread is not at all easy”.
“Patient 1” visited in a hospital in Codogno, south of Milan (Lombardy Region). According to the Guidelines of the Ministry of Health, he is not tested because he had not visited China, and he is sent home on 18 February. Symptoms get worse and he shows up again the next day: this time he is tested and diagnosed with coronavirus, after infecting his relatives, several patients in that hospital as well as health professionals. This marks the beginning of the (recorded) circulation of the virus in Italy.
The Ministry of Health revises its guidelines to healthcare units: those who show symptoms of a severe acute respiratory infection should also be tested.
Government establishes two “Red Zones” which are completely locked down:
- 10 towns in Lombardy (including Codogno)
- 1 town in Veneto
Business activities are suspended in that area.
The rules applying to the “Red Zones” are extended until 8 March.
A “Yellow Zone” is established, including 3 Northern Regions (Lombardy, Veneto, Emilia-Romagna) plus 2 other Provinces in other neighbouring Regions.
Restrictions to social interaction were in place throughout the “Yellow Zone” (including the suspension of sports events, organized public gatherings, school and university attendance, limitations on the opening hours of museums, restaurants, bars, shops, malls etc.) but there was no generalised suspension of business activities.
The Government adopts legislation providing for an extension of deadlines for tax/bill payments for households and businesses in the “Red Zone”.
A number of restrictions are imposed on the whole country. School and University attendance is suspended until 15 March.
The lockdown regime is lifted on the 11 towns of the former “Red Zone”. Lombardy + other 14 Northern Provinces now form an “Orange Zone”, where severe limitations to social interaction, freedom of movement and some business activities apply, but no lockdown is in place: manufacturing sites continue to be operational and transport of goods is not affected.
The “Orange Zone” regime is extended to the whole country, until 3 April.
The “Orange Zone” regime is tightened: with a few exemptions, retail merchants are shut down until 25 March. Manufacturing sites are still not impacted.
Upon the Government’s request, Parliament authorised an increase in the 2020 deficit ceiling by €25bn.
Amid blue collars’ protests, the Government signs a protocol with Unions and business associations to safeguard workers’ health in manufacturing sites, in an attempt at avoiding a shutdown of factories.
The Government passes a €25bn. package of measures to provide economic relieve to households and businesses.
The “Orange Zone” is further tightened through a Prime Minister Decree: the lockdown now applies to manufacturing sites as well, although with several exemptions. All previous measures are extended until 3 April.
Restrictions on the movement of people are also extended until 3 April, including an obligation for anyone entering Italy to undergo a 15-day quarantine (unless they are entering the country for proven work reasons, in which case they can stay in Italy for no longer than 5 days)
- The list of manufacturing sectors that are exempted from the lockdown is slightly amended through Decree 25 March 2020 signed by the Minister of Economic Development, Patuanelli.
- The Government sets out a new legal framework (Decree-Law 25/2020 n.19) for any future restriction until 31 July. Regions may adopt additional restrictions but are not allowed to take measures that impact on production facilities.
Amid concerns about the spread of poverty throughout the country, the Government distributes €400 million to local Administrations (Municipalities) so that they can provide low-income citizens with food stamps.
The “Orange Zone” regime is extended until 13 April
MEASURES TAKEN TO SUPPORT THE ECONOMY DURING THE LOCKDOWN
The €25 bn package includes, among others, the following measures:
Approximately €10 billion were allocated to fund income support schemes for workers whose company have shut down because of the restrictions imposed by the Government to tackle the covid-19 epidemic. The goal declared by the Government is to make sure that no worker is fired as a consequence of the partial lockdown regime. However, additional resources will be needed if the income support scheme is extended beyond nine weeks
The deadlines for the payment of withholding taxes/social security contributions/mandatory work injury compensation insurance premiums are suspended until 30 April for businesses in a wide range of sectors that are harmed by the restrictions in place.
Specifically, as regards SMEs, withholding Tax payments, VAT payments, contributions and insurance premiums that are due between 8 March and 31 March 2020 are suspended for professionals and businesses with a turnaround up to €2 million.
Businesses that sell non-performing loans within 31 December 2020 may convert deferred tax assets into tax credits, up to 20% of the nominal value of the loan.
SMEs having a debt exposure vs. banks will be granted an extension in payment deadlines until 30 September, and will benefit from the State’s guarantee on up to 80% of their exposure.
Those who apply for a suspension of mortgage payments will be exempted from 50% of the payment of interests accrued during the period when the mortgage payment is suspended – banks will be compensated by a dedicated public fund
Another stimulus package is expected to be passed by the Government in April – up to €50 billion.
LOCKDOWN OF MANUFACTURING SITES: STATE OF PLAY
Although the Government has agreed to extend the lockdown regime to certain manufacturing sites, the latest PM Decree allows several kinds of factories to remain open despite the claim of Regional Presidents and the Unions asking from more severe restrictions. The PM Decree of 22 March:
- exempt a list of sectors from the lockdown regime, and extends the exemptions to all the activities that are deemed as necessary to guarantee the continuity of the supply chains of the listed sectors
- allows the activities of continuous production plants, whose closure would result in serious damage to the plant or risk of accidents, and all strategic activities for the national economy to remain open.
ESTIMATED IMPACT OF THE LOCKDOWN ON THE ECONOMY
Although the Government has agreed to extend the lockdown regime to certain manufacturing sites, the latest PM Decree allows factories in several sectors to remain open.
According to the national business Association (Confindustria):
- Considering industrial production only, businesses that may stay open after the latest PM Decrees are approx. 171,000 or 42.6% of the total nationwide. They employ 1.7 million workers (39% of those employed in the industrial sector) and they account for 47% of Italy’s industrial production
- Considering economic activities overall, businesses that may stay open are approx. 1.9 million or 44% of the total nationwide. They employ 18.1 million workers (72% of the workforce) and they account for roughly 63% of the value added.
On 1 April, Confindustria released its estimates of the impact of the lockdown on the economy and public finances. In particular, assuming that 90% of businesses will be back to work by the end of May, Confindustria estimates that:
- Industrial production will fall by 20% in the first semester of this year vs. end of 2019
- On an annual basis GDP will fall by 6%, consumption by 6.8%, investment by 10.8%, export by 5.1%, while unemployment will rise to 11.2% vs. 9.9 last year
- Deficit/GDP will be 5% in 2020, while debt/GDP will rise to 147%.
CONTAGION SPREAD LATEST AVAILABLE DATA (02 April)
These are the official data which are updated on a daily basis by the Italian Government:
Tests: ~ 581,000
Overall number of people who were infected with Covid-19: 115,242
People fully recovered: 18,278
Confirmed cases as of 02 April: 83,049
Of the confirmed cases:
- Hospitalised patients (showing symptoms): 28,540
- Under intensive care: 4,053
- In quarantine at home: 50,456