March 9, 2021

Europe

ITALY: New restrictions, new subsidies

BY Wolfango Piccoli

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( 3 mins)

Italy on 8 March surpassed 100,000 coronavirus deaths, amid warnings the spread of new variants is fueling a third wave of infections. A jump in hospitalizations and a 23% rise in infections week-on-week suggest that the situation is rapidly worsening. Experts have warned that Italy should brace for a new peak in around two weeks and that daily cases could reach as high as 40,000 per day unless more severe restrictions are swiftly adopted.

Under a 6 March decree – the first one issued by the new Draghi government – some rules were altered, but the strategy for managing the pandemic overall remained the same. However, faced with a clearly rising infection rate, the government is likely to change course, especially as the system of varying localized restrictions seems unable to keep the infection rate under control due to the spread of Covid-19 variants. The government’s advisory panel, the Scientific Technical Committee (CTS), is meeting today to consider more stringent restrictions. Based on the CTS’ advice, the government is expected to decide by the end of this week, with new measures potentially coming into force by 15 March.

While a new nationwide lockdown is unlikely to be adopted as it is seen as politically toxic, the government could opt for tough lockdowns on weekends only, like the “red days” system used at Christmas and New Year. A less drastic version of a weekend lockdown would mean the closure of bars and restaurants and a ban on leaving the municipality of residence, but open shops at weekends. The existing night curfew, which starts at 10pm, could also be brought forward at local level depending on the rate of infections. Another measure that could be considered is automatically turning regions into red zones (and thereby closing schools and non-essential shops) if the threshold of 250 weekly virus cases per 100,000 inhabitants is breached, removing the discretion left to local administrators.

Meanwhile, Italy’s vaccination plan has made slow progress so far mainly due to the lack of personnel and logistical issues and not so much due to delivery delays from drug manufactures. As of today (9 March), almost 5.6 million shots had been administered, with 1.69 million of the country’s 60-million-strong population having received the recommended two doses. The government is considering switching tactics to give priority to first doses rather than stockpile second doses. Prime Minister Mario Draghi pledged again yesterday strong action to turn around Italy’s slow vaccination campaign, but no new initiatives have been announced yet.

On the policy front, the government is expected to unveil a new decree, which could be ready as early as this week, extending a freeze on layoffs imposed due to the Covid-19 pandemic until 30 June. Additional financial resources will also be allocated to furlough schemes, the fund for “citizen’s income”, and an emergency income initiative. Financial aid will also be granted to affected businesses (with an annual turnover of max EUR 5mn), self-employed workers and seasonal workers. The health care system will receive fresh resources for around EUR 2.5bn to support the fight against the pandemic. The overall package could be worth up to EUR 32bn.

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