Italy in the grip of the state: Meloni's influence on the economy is growing!

Italy in the grip of the state: Meloni's influence on the economy is growing!

The Italian government under Prime Minister Giorgia Meloni has significantly increased its influence on the economy since taking office in October 2022. This development is characterized by a significant increase in government interventions, which not only affect specific sectors but also the entire economy. According to the Stuttgarter Nachrichten, the government has introduced a regulation called Golden Power, which allows it to prevent unwanted takeovers in the economy, regardless of the origin of the potential buyer. This regulation now applies to almost all sectors of the Italian economy.

Historically, Italy already has a long tradition of economic intervention, starting with the Istituto per la Ricostruzione Industriale (IRI), which controlled much of the economy until the 1990s. The current course of the Meloni government continues this trend and intensifies state interference. Financial support for state-owned companies is also not uncommon as part of this policy. The sector that is particularly suffering from this policy is the steel industry, where the Ilva company, now known as Acciaierie d’Italia, has already cost taxpayers around 20 billion euros and continues to rely on government support.

Economic interventions in practice

The steelworks is currently run by three state commissioners and recently received 400 million euros in transitional aid. In addition to supporting Ilva, the Italian government is planning further investments to make the company more environmentally friendly. Spending of 5 billion euros is planned for converting to climate-friendly production. These government interventions are often justified by the argument of protecting national interests and creating jobs. Nevertheless, such measures have often resulted in high financial burdens for taxpayers without bringing about a noticeable improvement in companies' competitiveness, as the Neue Zürcher Nachrichten highlights.

Another example of state interventionism is the airline ITA, which was sold to Lufthansa after costing taxpayers at least 20 billion euros since the 1970s. Banks are also the focus of state support, as shown by Monte dei Paschi di Siena, which received massive capital grants in 2017 and 2022. The bank is now planning to take over the investment bank Mediobanca, which is supported by the government. However, this type of intervention often raises reservations among investors who fear possible government resistance to their offers.

Political implications and investor concerns

The Italian state has also intervened in the rights of the major Chinese shareholder Sinochem at Pirelli and is demanding a four-fifths majority for strategic decisions. Another challenge is the current takeover of Bank BPM by Unicredit, where government requirements are so rigorous that the transaction may no longer be profitable. In an additional move, Poste Italiane becomes the largest shareholder in Telecom Italia (TIM) with 24.8 percent through government support.

Returning to the interventions, the government has also exerted influence over the leadership of STMicroelectronics by pushing for the replacement of the CEO to protect national interests. The increasing, complex state interventions make it clear once again that, despite the arguments put forward to secure jobs and national interests, the benefit of these measures for the competitiveness of the domestic economy is in question.

In summary, it can be seen that under Giorgia Meloni state intervention in the Italian economy has reached a new peak. The high costs for taxpayers are a worrying signal that could deter both national and international investors. Government interest in economic activity will continue to increase, while competitiveness challenges and concerns remain.

The situation highlights the balancing act that the government must manage between national interest and promoting an economic environment that attracts investment.

For more information about the economic situation in Italy and the impact of government policies on the market, you can read the articles on the website Stuttgart News and the New Zurich News read up.