Italian economy under Meloni: State intervention is increasing!

Italian economy under Meloni: State intervention is increasing!

Under the leadership of Prime Minister Giorgia Meloni, the Italian state has significantly increased its intervention in the economy since October 2022. This comes as part of a comprehensive economic policy strategy aimed at safeguarding national interests and protecting Italy's economic heritage. [NZZ] reports that the Golden Power regulation allows the state to prevent unwanted takeovers regardless of the buyer's origin.

The tradition of state intervention in the Italian economy goes back a long way. Until the 1990s, the Istituto per la Ricostruzione Industriale (IRI) had much of the economy under control. This history is also reflected in current cases, such as the Acciaierie d’Italia, better known as Ilva, which was founded in 1965. This company has already cost taxpayers around 20 billion euros and is currently receiving 400 million euros in transitional aid while being led by three state commissioners. Despite the planned privatization, the government in Rome wants to retain a minority stake.

Examples of government intervention

Another example of state support is the airline ITA, which emerged from the former Alitalia and has cost taxpayers at least 20 billion euros since the 1970s. The sale to Lufthansa only came into effect with the backing of government aid.

The Monte dei Paschi di Siena (MPS) also receives significant government support. A total of 7 billion euros was made available to the institute in 2017 and 2022. MPS is now planning a takeover of Mediobanca, which is backed by Rome despite observers raising concerns. Similar strict conditions can be observed in connection with the takeover of Bank BPM by Unicredit, which could make the project unprofitable.

• Ilva (Acciaierie d’Italia): Bisherige Kosten: 20 Milliarden Euro; erhält 400 Millionen Euro Übergangshilfen.
• ITA (ehemals Alitalia): Kosten in den letzten Jahrzehnten: Mindestens 20 Milliarden Euro.
• Monte dei Paschi di Siena: Kapitalspritze 2017: 5,4 Milliarden Euro; 2022: 1,6 Milliarden Euro.

Market distortion through government intervention

A notable further step by the Italian government was an intervention at Pirelli, where the rights of the major Chinese shareholder Sinochem were curtailed. In addition, Poste Italiane became the largest shareholder in Telecom Italia (TIM) with 24.8 percent, a position that would hardly have been possible without government support.

The Italian government is also pushing for the replacement of the CEO of STMicroelectronics to protect national interests. These numerous state interventions are often justified with the argument of protecting national interests and securing jobs. But they also ensure that many investors are put off by potential government resistance.

Italy has stakes in various companies, including Eni, Enel, Saipem, Webuild, Fincantieri and Leonardo, all of which are influenced by state control. However, in recent decades, government interventions have incurred high costs for taxpayers without halting the decline of companies or sustainably improving the competitiveness of the Italian economy. [IADCLaw] notes that the ongoing trend toward greater government intervention poses both risks and challenges for the future development of the economy.