Italy’s government sought parliamentary approval for 8 billion euros ($9.5 billion) of extra deficit this year, as Prime Minister Giuseppe Conte battles to shield the fragile economy from a coronavirus resurgence.
A cabinet meeting chaired by Conte approved the request to parliament, according to a statement by the premier’s office. The government also signed off on a third package of aid, worth 1.95 billion euros for 2020, chiefly for shops and businesses hit by a soft lockdown in regions including Lombardy around Milan.
The euro area’s third-largest economy is struggling to finance relief measures for business and families hurt by the pandemic. Two emergency decrees tried to soften the blow for businesses forced to shut down but Italy only has enough money to cover the cost of stimulus for the month of November.
The government is expected to seek a further widening of the deficit in January.
Italian group sees second recession risk due to virus
The Italian economy is at risk of a second recession, with a contraction forecast in the fourth quarter due to soft lockdown measures to counter a resurgence of the coronavirus, industry lobby Confindustria said in a report.
The impact of the lockdown in regions including Lombardy should be contained compared with the decline in gross domestic product in the first two quarters of 2020, given that many businesses remain open, Confindustria said.
A rapid rebound in industrial output was interrupted in September and October, and there could be a moderate decline in fourth quarter.