Rome. Industrial concerns
Head of lobby group raises protectionist fears as populist parties near coalition accord ‘We cannot take for granted that this privileged position in the club of advanced economies will remain unchanged regardless of choices we make’
The head of Italy’s largest business lobby group has said the country’s advanced economy status would be at risk if it cut ties with Europe and resorted to protectionism, in a stark warning to the two populist parties on the verge of forming a government in Rome. “We are a great industrial country, which is a source of national pride. But nothing is forever,” Vincenzo Boccia, the president of Confindustria, said at the organisation’s annual assembly yesterday. “We cannot take for granted that this favourable condition, this privileged position in the club of advanced economies will remain unchanged regardless of the choices we make.” His warning followed a sell-off in Italian debt this week as investor concern grew about an impending government alliance between the anti-establishment Five Star Movement and the far-right League. They won wide support in the March election because of dissatisfaction with the slow pace of economic growth and high unemployment. Giuseppe Conte, a little-known academic proposed by the parties as prime minister, was given a formal mandate by President Sergio Mattarella yesterday evening to lead the government. Many in Italian business have long feared a Five Star-League government, whose joint platform is laced with economic nationalism and challenges the EU monetary, fiscal, regulatory and trade regime that has been the bedrock of the country’s economy for decades. Italian banks experienced another heavy sell-off yesterday. Luca Cordero di Montezemolo, a leading business leader, this week expressed disdain for the mooted appointment of Mr Conte. “If you stopped 20 Italian business leaders in the street and asked who Conte was, 20 Italian business leaders would say ‘I don’t know this guy’.” But after more than two months of political negotiations some business leaders accept that the anti-establishment parties should now get their opportunity to govern – even if only to prove they cannot. “We need to respect the vote and sit down and wait and see if these people do a good job. And if they do not, then we have a right to vote again [at the next general elections],” Diego Delia Valle, the billionaire luxury tycoon behind shoe brands Tod’s and Roger Vivier, has told the Financial Times. Mr Delia Valle, whose industrial interests range from banking to media and football, has been a fierce critic of Italy’s gerontocratic elite, known as the “petrified forest”. He said Italy’s establishment must recognise that Five Star and {he League reflected the ascent of “a younger generation”. Business leaders who have benefited from investor enthusiasm for European stocks and dealmaking over the past year – the result of a better than expected regional recovery and optimism over last year’s French election win for Emmanuel Macron – also want to remain optimistic. “People come and go. We have had about 70 governments since the war and I think there will soon be others. I would not be too worried,” Luigi de Vecchi, Paris-based chairman of Citi’s investment banking business in Europe and one of Europe’s most prolific dealmakers, said this week at an FT event. Many Italian companies have already hedged domestic political risk by expanding abroad. Italy’s most successful small and mid-sized companies such as IMA, a high technology manufacturer of packaging machines, make more than 90 per cent of their revenues outside of Italy. Fiat Chrysler, Italy’s biggest private employer, moved its main headquarters and primary listing to the US in 2014 and makes less than a fifth of its revenues in Italy. Pietro Salini, chief executive of Salini Impregilo, an infrastructure and construction group that in 2015 bought US construction company Lane, last month said the company could move its listing to the US within 18 months. Confindustria has not been an unabashed cheerleader for the EU in recent years, for example opposing regional banking rules it felt unfairly damaged Italian financial institutions. But Mr Boccia said that Europe was “essential” to Italy. “We can criticise it for what it fails to do, for the slowness of its decisions, the Byzantine nature of its legislation and its [leaders] and we must push to do more and better,” he said.’ “But we cannot question the principle that only together we can keep generating wellbeing and social cohesion.” He also said Italy should not abandon big infrastructure projects, including a high-speed rail link between Turin and Lyon in France. Five Star, in particular, has attacked such projects as sources of corruption and environmental damage.