Italy Set to Back $3 Billion Boost in Lockdown Aid for Business

Italy’s government is expected to approve an extra 2.5 billion euros ($3 billion) in pandemic relief for businesses hit by the country’s second lockdown, said officials familiar with the discussions.

Prime Minister Giuseppe Conte is planning to hold a cabinet meeting on Friday evening to back the measures, which extend support to more companies compared to an earlier 5 billion-euro aid decree. With the Covid-19 virus surging in Europe, Italians are prohibited from leaving or entering cities in high-risk areas, including Milan, Italy’s financial hub, and key northern industrial cities.

The extra aid seeks to shield companies and families in the highest-risk areas, according to a draft of the decree seen by Bloomberg News. Conte told a conference earlier Friday it would include tax credits on rentals of business premises from September to December, and the suspension of a housing levy as well as of pension contributions for employees, the newswire Ansa reported.

Other measures include a baby-sitter bonus of as much as 1,000 euros for families in lockdown areas, the draft shows.

A spokesperson for the Treasury declined to comment on amount of aid.

Italy’s lockdown, while more limited than nationwide rules imposed in the spring, jeopardizes a fragile economy. The country’s budget assumes that gross domestic product could shrink by 10.5% this year in a worst-case scenario, and expand only 1.8% in 2021.

The government has previously approved 100 billion euros in stimulus to protect Italian companies and jobs. That is pushing Italy’s debt, the euro area’s second-biggest, to almost 160% of output.

With virus cases mounting and the risk of further and longer lockdowns, Conte may be forced to ask parliament to widen the deficit before the end of the year. Italy is set to receive 209 billion euros in grants and loans from the European Union’s recovery fund for investments that could help boost growth in coming years.

— With assistance by Alessandra Migliaccio

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