Italy approves new stimulus package to bolster shrinking economy

The euro area’s third-largest economy has struggled to deal with the economic fallout from the pandemic. (Photo by Bloomberg)

The euro area’s third-largest economy has struggled to deal with the economic fallout from the pandemic. (Photo by Bloomberg)

-A +A

(Nov 30): Italy’s government has approved a fourth stimulus package to support businesses hit by the latest restrictions to stem the spread of the coronavirus.

The package is worth 8 billion euros ($9.6 billion), according to a statement published Monday. It delays tax deadlines for companies and expands cash handouts for workers in tourism and the arts, which have been severely disrupted by the pandemic.

The euro area’s third-largest economy has struggled to deal with the economic fallout from the pandemic. Saddled with one of the world’s heaviest debt burdens, it has relied on exceptional support from the European Central Bank to tap bond markets.

Italy’s parliament this month backed the government’s request to swell the nation’s budget deficit by 8 billion euros to fund the additional relief measures.

Bloomberg Economics estimates the economy will shrink 1.8% in the final three months of the year, if the current restrictions don’t change. That compares with the 13% drop recorded in the second quarter, when much stricter curbs were in place.

Prime Minister Giuseppe Conte approved 100 billion euros in stimulus to provide support during the first wave of the pandemic in the spring. Any extra spending is set to send debt above 160% of GDP by the end of the year.