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A Confindustria report sees signs of recovery for Italy’s Mezzogiorno

by Nicoletta Picchio

There are signs of a recovery. Even in the underdeveloped Mezzogiorno (Southern Italy) the economy is rising again.

“One more reason to enhance the functioning of the instruments we already have and to set in motion what’s missing,” said the vice president of Confindustria (the entrepreneurs’ association) for the Mezzogiorno and Regional Policies Alessandro Laterza. He was referring to the government’s Masterplan for the South announced last summer and still not launched.

Southern Italy has a transitioning entrepreneurial fabric, more robust than in the past, according to the second SMEs Report Mezzogiorno 2016 by Confindustria and Cerved presented in Bari today.

Some instruments already exist, said Laterza, which are also the result of Confindustria’s commitment: the 2016 Stability Law included a tax credit for the South. This measure will be effective until December 31 2019 for a total value of €2.4 billion (using European structural funds and the Fund for development and cohesion), €617 million per year.

“It will be operating starting from June,” said Laterza. “A meaningful springboard to stimulate private investments.”

The tax credit is not only completely automatic, but it’s on the top of the “super amoritization.” 

“The tax break for new hires would be a relevant third pillar,” added Laterza.

According to the data, in 2015 almost 384,000 employees were hired in the South thanks to this incentive, and almost 59,000 temporary contracts were turned into permanent ones.

If the Italian government wants to relaunch public investment, also through the flexibility allowed by Brussels that for the South means €7 billion, it’s urgent to implement the Masterplan: ”It’s a way to coordinate the action of the Regions and to fasten the use of European funds. Administrations are still busy managing the last part of the EU program 2007-2013, but time runs fast and the risk is to face huge problems in the second part of the programming cycle.”

Laterza insists on one aspect and indicates it as still very critical: credit. “A lot has been done, from mortgages and debts suspensions to the use of non-banking instruments, like mini bonds,” said Laterza. “But we need to go one step further: there’s no need of new tools, but rather to enhance those already existent.”

For example, the SMEs Guarantee Fund: according to Laterza it should be used also for non-Southern enterprises which invest in the Mezzogiorno.

Of course, companies must play their part. They are still small or medium-sized and undercapitalized, even if Southern Italy is showing important sign of vitality, also through the presence of innovative businesses: “A step further is absolutely necessary to survive the crisis and as a result of the Operational Regional Programs 2014-2020 which bet on the connection between private companies and the research system.”

Instruments aside, Laterza insisted on one aspect: “Southern Italy is a big issue that must be dealt with in a national and European framework. The idea that Mezzogiorno’s problems are to be solved in a fenced area is destined to fail.”