Italy’s destiny hangs on €248bn recovery plan, says Draghi

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Italy’s prime minister Mario Draghi has warned the “destiny of the country” depends on the success of a €248bn package of investments and reforms to relaunch its pandemic-ravaged economy.

Speaking to lawmakers on Monday, Draghi, who was appointed to lead a national unity government in February, outlined the high stakes involved in a plan to tackle some of the most entrenched structural problems of the eurozone’s third-largest economy.

“In the set of programmes that I am presenting to you today there is also and above all the destiny of the country,” Draghi said. “The measure of what its role in the international community will be — its credibility and reputation as a founder of the European Union and a leading player in the Western world.”

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Italy, which has been severely hurt by the pandemic in both health and economic terms, is to receive one of largest shares of the EU’s €750bn Recovery and Resilience Plan, launched last year to help member states recover from the pandemic. Spain is expected to be another leading recipient.

Draghi said the package would include €191.5bn from the EU funds and €30.6bn in fresh money from Italy’s national budget to invest in transport infrastructure, digitalisation and the environment as well as spending on structural reforms to modernise the Italian bureaucracy. An additional €26bn has also been earmarked notably to improve transportation links between the south and the north, taking the total package to €248bn.

The spending, he said, would be centred around three main objectives for Italy: bridging the divide between the country’s wealthy industrialised north and poorer south; improving gender equality; and narrowing the disparity between generations. 

The Draghi government forecasts that the boost to the economy from the investments and reform will add 3.2 percentage points to gross domestic product between 2024 and 2026.

Of the total, 40 per cent will be spent on green projects, which Draghi said were “particularly important for Italy, which is more exposed to climate risks than other countries”, and 27 per cent dedicated to the digitalisation of the Italian economy. 

Overlapping this, €82bn would be allocated to Italy’s southern regions. Draghi said €26bn would be used to build a high-speed rail line between Salerno and the southern town of Reggio Calabria, as well as upgrading the train line between Milan and Venice in the north.

Other investments will include €32bn on education, including boosting research and vocational training and increasing the number of kindergartens and nursery schools.

The prime minister said €22bn will be spent on training workers and improving social inclusion, and €18.5bn on public health, including strengthening primary care and digitalising the health sector.

“The Covid-19 pandemic confirmed the universal value of health, its nature as a fundamental public good, and the macroeconomic importance of public health services,” Draghi said.

Draghi, who commands an overwhelming parliamentary majority with the backing of almost every Italian political party, also warned the country’s lawmakers of the need for unity to ensure the reforms would be successful.

“The work of renewal will fail . . . if there are not disinterested men ready to toil and sacrifice themselves for the common good,” he said, quoting Alcide De Gasperi, the first prime minister of the postwar Italian republic.

“I am certain that we will succeed in implementing this plan,” he said. “I am sure that honesty, intelligence and a care for the future will prevail over corruption, stupidity, vested interests”.

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