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The pandemic has prompted governments to take a more active role in managing their economies. Politicians are giving out generous loan guarantees and subsidising wages to reduce the risk of a wave of bankruptcies and mass unemployment. The next step is taking over companies directly. After a spree of recent acquisitions — from payment systems to airlines — Italy appears to be headed in this direction already.
It’s a troubling prospect.
For much of the past three decades, Italy had shifted decisively away from the command economy model that dominated the country after the late 1930s. Under Mario Draghi’s stewardship, Italy’s Treasury embarked on one of the largest privatidation programs in western Europe, encompassing everything from banks to utilities. Public spending still accounted for 48.7% of gross domestic product last year.
But from left to right successive governments tried to introduce structural reforms and open up to private investment.
The present coalition government of the left-of-center Democratic Party and the populist Five Star Movement has put a stop to all that. Last week it unveiled the new board of Alitalia, the chronically unprofitable airline, and will spend 3 billion euros ($3.5 billion) nationalising the company.
Meanwhile, Cassa Depositi e Prestiti SpA, Itay’s state lender, has acquired a 7.3% stake in Euronext as part of the latter’s takeover of exchange operator Borsa Italiana. Similarly, CDP has become the top investor
of Nexi SpA following the digital-payment company’s purchase of SIA SpA.
—Bloomberg