When Italy’s government commissioned its Covid-19 recovery plan from a group of experts led by former Vodafone chief Vittorio Colao last spring, businesses were confident they would play a leading role in shaping an investment strategy that would help restore prosperity.
Their hopes were soon shattered in the face of the country’s notorious political instability.
Italy is set to be the main beneficiary of the EU’s Covid-19 recovery fund, receiving 28 per cent of a total €750bn in grants and loans over the next six years. Mr Colao’s detailed 53-page plan for spending it, outlining 100 investment proposals divided according to complexity, timing and funding needs, was delivered in June. But it was immediately sidelined by political infighting.
The fractious coalition government, led by Giuseppe Conte, spent months arguing about priorities and resource allocation. In December, it published a 13-page rough draft that largely ignored Mr Colao’s recommendations, instead envisaging aid to businesses and families and with few funds for new investment projects or health.
A junior coalition partner, Matteo Renzi’s small Italia Viva party, opposed the plan and attacked Mr Conte’s decision making, triggering a political crisis that led to Italia Viva’s withdrawal from government and Mr Conte’s resignation last week.
“[Mr] Colao’s plan was a good one, which is why I knew it would end up in a dusty drawer,” said Valerio Andreoli Bonazzi chief executive of renewable energy company Hydrowatt.
According to the government draft, Italy will receive €81bn in grants and €127bn in loans from the EU’s Covid-19 recovery fund plus an additional €20bn in cohesion funds. It identifies digitalisation, energy transition, health, infrastructure, education and social equality as priorities. Investment would be targeted at offshore wind energy, floating solar, high speed rail expansion across the country, internet upgrades and the renovation of school and hospital infrastructure, which is on average 70 years old.
But many business leaders, voicing concern through Confindustria, Italy’s industry lobby group, say the draft plan lacks crucial reforms or detail on governance and procedure. Trade unions have complained that they were excluded from the discussions.
“The plan’s draft is completely disconnected from the reality [for small and medium enterprises] and, as entrepreneurs, we’re dismayed by what is going on because we were never involved,” said Mr Andreoli.
“Many of the futuristic energy infrastructure projects will never be greenlighted because of the various environmental restrictions and other authorisation requirements,” he said.
“We see our authorisation requests rejected on a daily basis, we struggle with every single €1m project, imagine what will happen with billions at play.”
Angelica Donati, chief executive of construction group Donati, said that while the draft was a substantial improvement on an initial version, bureaucracy was likely to hinder investment.
“It takes on average 15 years to complete a large infrastructure [project] in Italy and none of the [recent] emergency legislation to simplify tender rules and administrative procedures improved the situation,” she said.
Ms Donati also said many of the projects indicated in the draft plan, including several high speed rail links, had already been approved and funded but were never realised because of bureaucratic hurdles.
Italy has always struggled to spend EU funds. In 2019, it only absorbed 30 per cent of the structural funding it received.
Marco Tronchetti Provera, chief executive of Pirelli, said dialogue between different stakeholders must improve. But he but was confident that conditions attached to the EU funding would force Italy to devise a comprehensive strategy. “We’re close to the moment of truth, we need a plan within the EU’s stringent investment and reforms parameters and we need to indicate exactly how to get there,” he said.
Roberto Gualtieri, Italy’s finance minister, said last week that the government would streamline tender procedures and bypass bureaucracy through special commissioners.
Some officials have blamed decades of privatisation for the lack of vital technical expertise within government departments, which are struggling to put together a plan that meets EU and business expectations.
According to Assoconsult, which represents Italy’s management consultancies, the public sector skills gap meant consultants could reap some 4 per cent of the EU funds. “Management consultancies deal with projects execution, monitoring and auditing activities on a daily basis . . . we could have a pivotal role in successfully executing the various projects,” said Marco Valerio Morelli, chief executive of Mercer Italia and president of Assoconsult.
“There needs to be a centralised control room, the government must indicate somebody who will serve as programme manager and people to oversee processes across the various sectors,” he said.
According to the first Covid-19 recovery plan draft, Mr Conte had intended to hand the plan’s management to a task force of chief executives and business managers. But the idea was rejected by other members of the coalition and pulled from the latest draft, which offers no detail on who will be in charge of implementation.
“Who will be in government is indifferent, what will make the difference is the government’s commitment to engage with businesses and implement the reforms that have hindered the Italian economy for years,” Mr Tronchetti said. “Otherwise we aren’t getting the money — and this is not a suggestion, it’s a fact.”