May 12, 2021

Italy Plans New Measures to Liberalize Economy

The measures come as Mr. Monti, a technocrat who assumed power in November, races to prevent Italy from falling into an “austerity trap,” in which the $40 billion package of tax increases and spending cuts passed in December to trim the budget deficit would cause a further contraction. The Bank of Italy has said that the country’s economy is expected to shrink 1.5 percent this year, while the International Monetary Fund forecast that it would contract 2.2 percent.

The changes, which are expected to be submitted to Parliament for approval soon, include allowing gas stations to choose their providers, speeding up the pace of the legal system, adding 5,000 more pharmacy licenses and accelerating the liberalization of local services. They would also add 500 slots for notaries.

“Italy’s economy has for decades been hindered in its economic and social growth by three big problems: insufficient competition, inadequate infrastructure and too much red tape,” Mr. Monti said at a news conference in Rome after an eight-hour cabinet meeting.

He said that his government, which in December raised the retirement age and re-introduced an unpopular property tax, had asked Italians for “many sacrifices.” But he said the new measures would help protect them from hidden costs that increase the cost of living.

Mr. Monti said that next week, his cabinet would approve a package of measures aimed at cutting bureaucracy and would continue work to loosen the country’s rigid labor laws in consultation with labor unions.

At the news conference, Industry Minister Corrado Passera said the cabinet had voted to release 5.5 billion euros, $7.1 billion, to finance or speed up infrastructure projects.

Economists said the new package of measures was the best Mr. Monti could do, as he struggled to encourage growth and cut spending at the same time.

“This was one of the only ways to jump-start the economy at zero cost because the government can’t give people money, tourism is no longer a draw and Italy has lost its attractiveness to foreign investors,” said Roberto Ravazzoni at Bocconi University in Milan.

Opening up the economy to greater competition was “the only way to go, if you want to give citizens some breathing room,” Mr. Ravazzoni said.

While it remains to be seen how much effect opening the so-called closed professions will have on growth, it is an important symbolic measure aimed at weakening the guilds and professional networks that inhibit competition and protect insiders, keeping prices high and making it difficult for young people to enter the labor market.

“More competition also means more opening, more space for the young,” Mr. Monti said, adding that the changes would create less space for “privilege and more recognition for merit.” The measures were “not only a big economic operation, but also a big social action,” he added

Such antiprotectionist measures have foundered in Greece, where guilds have powerful political connections that have helped block change. Mr. Monti faces much the same pressures as he tries to encourage growth and investment in Italy, which with a debt equivalent to 120 percent of its gross domestic product is the most indebted of the euro zone nations after Greece.

In the coming days, Italian lawyers are planning to go on strike to protest measures to reduce their minimum fees, and gas stations and other businesses are planning strikes or sit-ins. Pharmacies are upset at plans to allow more licenses. Prescription medications can be sold only in pharmacies.

After days of wildcat taxi strikes that have paralyzed Rome and other cities, the government backed down on its pledge to increase the number of taxi licenses.

The government said it would set up a new transport authority to discuss new licenses with local mayors. The taxi drivers are important supporters of Rome’s mayor, Gianni Alemanno, a player with the center-right People of Liberties party led by former Prime Minister Silvio Berlusconi, which is supporting Mr. Monti’s government.

At a hearing in Milan on Friday in one of his continuing corruption trials, Mr. Berlusconi, who left office in November, said that the austerity recipe in Italy had “not borne fruit,” the news agency ANSA reported. “We’re waiting to be called back,” he added.

Elisabetta Povoledo reported from Rome, and Rachel Donadio from Athens. Gaia Pianigiani contributed reporting from Giglio, Italy.

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