Italy will spend in ‘massive shock therapy’ against coronavirus

Italy’s government will further increase spending in a “massive shock therapy” to offset the economic impact of the coronavirus outbreak, the prime minister said on Monday.

“We will not stop here. We will use a massive shock therapy. To come out of this emergency we will use all human and economic resources,” Prime Minister Giuseppe Conte told daily la Repubblica.

Conte added that the government would use the flexibility envisaged by European budget rules “in full”.

“Europe cannot think of confronting an extraordinary situation with ordinary measures,” Conte added in the interview.

The Italian government also urged the European Union to adopt a package of measures to counter the impact of the coronavirus outbreak on the economies of the block.

The economy ministry said: “The government will spare no effort to ensure that a package of measures is agreed at the EU level in coordination with the whole international community.”

The premier said his coalition government was studying various initiatives, without giving further details, and that between today and tomorrow he would meet representatives of the opposition to discuss the new economic measures.

Rome on Sunday approved unprecedented quarantine measures with a virtual lockdown across most of its wealthy north, including the financial capital Milan, in a drastic new attempt to rein in an outbreak of the illness.

So far Italy has been hit harder by the crisis than anywhere else in Europe, with deaths leaping sharply again to 366 and the total number of infections jumping by 25 percent to 7,375.

Economy Minister Roberto Gualtieri last week pledged some 7.5 billion euros ($8.55bn) in measures to help the economy withstand the effects of the epidemic, raising this year’s budget deficit goal to 2.5 percent of national output from its current 2.2 percent.

The European Commission told Italy on Saturday that its planned extra spending in response to the coronavirus would not be counted in considering its compliance with European Union budget rules.

EU rules allow a temporary deviation from the deficit goals in case of exceptional events, including severe economic recession and major natural disasters.

The Milan stock exchange, whose all-share index has plunged 17 percent since the crisis broke, was scheduled to open normally on Monday, but one trader said he expected “a violent sell-off”.