Old troubles and new: Business turmoil awaits Italy’s election winner

  • Italy faces huge economic challenge after Sunday’s vote
  • Energy crisis, inflation are long-standing problems
  • Italy’s productivity stagnates, heavily indebted
  • Far-right Georgia Melloni expected to win election

TERNI, Italy, Sept 22 (Reuters) – Inflation, a looming recession and impossibly high energy bills are among the daunting economic issues awaiting the winner of Sunday’s Italian general election, which are giving the industrial city of Terni a boost Ni casts a particularly long shadow.

According to Cerved, a Milan-based economic think tank, about 24.5% of Terni’s 16,000 companies are at risk of bankruptcy in the short term, the second highest in the country after Crotone, in Calabria’s southern region. The second highest level.

About 100 kilometers (62 miles) north of Rome, the wealth of Terni’s 106,000 inhabitants has been tied for more than a century to its main employer, Acciai Speciali Terni, one of Italy’s largest steel mills.

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Last week the plant sent 400 of its 2,278 workers home on pay cuts until better times as gas and electricity costs soared. Workers on furlough see no reason to hope.

“We’ve had energy problems at home with gas and electricity bills, so now we have a job crisis on top of the domestic crisis,” said Igor Moresi, who worked at the mill for 22 years as a coiler. Moresi) said.

Costs for Italy’s energy-hungry steel industry have risen tenfold since a year ago, according to steelmakers’ lobby group Federacciai.

As in much of Europe, it’s not just energy prices that are hurting Italian companies and households. Headline inflation, exacerbated by the Ukraine war, hit 9.1 percent in August, the highest level since the EU’s unified index was launched in 1997.


Like most young Italians, job security has been a mirage for 31-year-old Jacopo Calabresi, another worker sent home from the steel plant in Terni. He was given a temporary contract for his first five years at the factory, before finally securing a stable position two months ago.

“After years of uncertainty, I had a brief lull. Now of course I’m very worried again,” he said.

Statistics bureau ISTAT said the number of temporary contracts in July was the highest since records began in 1977. The prevalence of this temporary, low-paying job has prompted thousands of young Italians to seek better prospects abroad.

The new energy and inflation crisis comes on top of Italy’s longstanding problems, such as sluggish growth, stagnant productivity, huge public debt, low employment, obnoxious bureaucracy and a snail-paced judicial system.read more

If the polls are correct, after Sunday, all of this will fall into the hands of Giorgia Meloni, the leader of Italy’s nationalist fraternal party, who looks set to become Italy’s first-ever female prime minister.

Guido Crosetto, a close aide to Meloni and co-founder of her party, warned this month that the full impact of energy costs on the economy would be felt later in the fall, potentially triggering widespread disruptions. social unrest.

“It will be like Gotham City,” he said, calling on opposition parties to help the new government but excluding another coalition of national unity such as that led by outgoing Prime Minister Mario Draghi.

Meloni said she would push for a European cap on gas imports from Russia — something Draghi has been trying in vain for months — and she wanted to break the link between domestic gas and electricity prices.

She promised sweeping tax cuts while vowing to be “prudent” about public finances. Like the manifestos of all of Italy’s major political parties, the Italian Brothers’ manifesto provides few details on how its policies will be funded.read more

save tape

Under the current circumstances, even Terni’s most successful companies are feeling the pinch.

Fratelli Canalicchio, which makes components for luxury yachts, has been expanding since its founding 30 years ago, but co-owner Giovanni Canalicchio says there are more and more hurdles to overcome.

Steel prices have doubled in the last year, driving down profit margins, and successive governments have failed to reduce the red tape that most Italian companies have complained about, he said.

“Other European countries have much less bureaucracy, which allows their businesses to react faster to changes,” he said at his factory, which has about 60 workers cutting and shaping the yacht’s Steel parts.

“How do I see the economic situation in this country? Honestly, it’s not very optimistic.”

Meloni’s campaign has largely targeted small and medium-sized companies in Italy, such as Canalicchio’s, and while he did not say who he would vote for on Sunday, the businessman said he could understand her popularity.

“She’s the only one who has done what she said, staying in opposition and not in Draghi’s coalition government, so she’s the only party that is different,” he said.

About 5 kilometers down the road, Coppini is a family business with 23 workers that has been producing another Italian specialty olive oil since 1955.

Its chief executive, Micaela Coppini, said the company could not plan ahead or invest because glass and paper suppliers for its bottles may have to suspend production due to rising energy costs.

Coppini’s own electricity bills rose 251% in the first quarter compared with a year earlier, she said, although the company mitigated the impact by installing solar panels before the current crunch.

“The next government will have to act to reduce energy bills, otherwise the country’s production system may come to a standstill,” she said.

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Written by Gavin Jones, edited by Alexandra Hudson

Our Standard: The Thomson Reuters Trust Principles.

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