Italy poised to get first EU recovery-fund tranche

Bloomberg

Italy may get the first part of a more than 200 billion-euro ($243 billion) European Union (EU) pandemic recovery-fund package as soon as next month, Il Messaggero cited Public Administration Minister Renato Brunetta as saying.
The country stands to receive 25 billion euros “between July and August,” the newspaper quoted him as saying in an interview. Measures approved recently by the Italian government on governance, administrative simplification and human-capital recruitment will provide the “pillars of the recovery plan,” he said.
Prime Minister Mario Draghi’s cabinet last month backed a plan to cut red tape, facilitate public-works projects and streamline tender procedures to help kick start growth in Europe’s fourth-largest economy. A decree approved in May also requires that at least 30% of new hires by companies bidding for tenders financed by EU funds are women no older than 36.
Italy is set to be the biggest beneficiary of the EU recovery fund, receiving more than 200 billion euros in the coming years. The economy is likely to grow more than 4% in 2021 as the funds kick in and businesses reopen, Bank of Italy Governor Ignazio Visco said last week.
Italy’s economy grows in Q1
Italy’s economy unexpectedly grew 0.1% in the first quarter of the year, helped by over a year of government spending to counter the impact of successive lockdowns.
Quarterly growth was revised from a previous reading that showed a contraction of 0.4%, Italy’s national statistics bureau, or ISTAT, said.
The figures could help bolster confidence in Italy’s economic rebound after being one of the hardest-hit European nations by the pandemic in 2020, when gross domestic product shrank almost 9%. Italian government bonds held gains after the data, with the yield on 10-year securities down two basis points to 0.89%.
The government pumped over 170 billion euros ($208 billion) into the euro area’s third-largest economy over the past year. Results are starting to show in areas like non-residential construction, which grew 5.2% on the quarter. Investments in housing also increased by 4.8% in the same period, according to Istat data.
“Productive activity in the country is improving,” Prime Minister Mario Draghi said in a speech. “We have a new phase ahead of us, a phase of recovery and confidence”
Other government measures included a 110% “super-bonus” tax deduction for building renovation.
Growth was also aided by manufacturing, which has helped offset the struggle of services such as tourism.
The quarterly revision means the economy shrank 0.8% compared with the same period a year earlier instead of a 1.4% contraction as previously thought.
Bank of Italy Governor Ignazio Visco said that the economy was likely to grow more than 4% this year, driven by the reopening of businesses as well as funds pledged by the European Union.