Italy has Europe’s greatest vaccine need

It’s no surprise that Italy was the first European Union nation to say it would restart AstraZeneca Covid vaccinations, just moments after the bloc’s drugs regulator gave its renewed blessing for the shots. All of the EU’s big member states need to jumpstart their painfully slow vaccine drives, but Italy’s need is greatest.
The country has suffered more deaths than any of its EU partners, and its economy is more precarious than most. Prime Minister Mario Draghi is new to the job, but without a serious improvement in inoculation numbers he’ll soon erode the political and popular goodwill that brought him to power, and which he’ll need to pull the euro zone’s third-largest economy back from the brink.
In a quirk of timing, the European Medicines Agency’s AstraZeneca decision came hours after Draghi led a day of national mourning for Italy’s Covid-19 victims from Bergamo, the hilltop town near Milan that a year ago became one of the pandemic’s deadliest killing fields. Now that vaccines are available, the prime minister can’t afford to fail a public that’s desperate to move on.
Wealthy northern Italy was the first place where the pandemic landed like a tsunami outside of China, and by some calculations it remains the world’s worst-hit region. A year later and the cost continues to mount. Italy is the smallest country to record more than 100,000 Covid deaths. This month it entered a new lockdown; schools have been shut and people sent home.
The economic imperative of vaccination is clear. Like the rest of the EU, Italy has fallen weeks behind schedule for its target of vaccinating 70% of the adult population by the summer. Compared with the UK, where 38.5% of people have received at least one shot, Italy’s figure is 8.4%, according to the Bloomberg vaccine tracker. In Italy, each week of delay equals 2 billion euros ($2.4 billion) of lost output, estimates Allianz senior economist Patrick Krizan.
Crucially, Italy was in a bad state financially before the pandemic struck. It was the only G7 country not to have seen its economic growth return to pre-2007 levels, and its per capita income is the same as in 1998.
Moreover, the backbone of the economy is small and midsize businesses that are especially vulnerable to the business disruptions inflicted by the pandemic. This is different from France where the economy is made up of large, multinational firms and even from Germany where the Mittelstand industrial belt shares some similarities with Italy’s industrial north.
Smaller firms in Germany and Italy rely heavily on bank debt, but in Italy the situation is more extreme. The OECD has calculated that 40% of Italian company assets are financed by short-term loans, far higher than their European peers. This constrains investment and makes Italy’s employers more vulnerable to macroeconomic shocks. Cerved, a Rome-based tracker of Italian insolvencies, estimates that small and midsize firms have lost as much as 65 billion euros of capital value during the pandemic. Companies in hard-hit sectors, such as logistics and transportation, could have lost as much as 15% of their capital value over the past year.
Draghi, a former European Central Bank president and Italian central banker who became prime minister a month ago in a coup de theatre intervention by Italy’s President Sergio Mattarella, understands the urgent need for vaccinations to let Italy return to business. He has appointed a vaccine commissioner and a scientific technical committee to advise him.
This month, Italy was the first EU country to use the bloc’s new regulations allowing vaccine exports to be seized if the manufacturer had failed to meet its EU obligations. Italian police blocked the export to Australia of 250,000 AstraZeneca doses produced in Italy.
—Bloomberg