Business group warns of fuel crisis impact in Italy

Thousands of Italian enterprises will close and the ranks of the unemployed will swell in the coming months if the government fails to deal with soaring energy prices, one of Italy's top business associations has warned.

The General Confederation of Italian Industry, or Confindustria, which represents 113,000 companies with 4.2 million workers, said Rome must come up with an aid package to offset the damage caused by fast-rising fuel bills.

Carlo Bonomi, the organization's head, told La Stampa newspaper that a package costing around 40 billion to 50 billion euros ($38.7 billion to $48.5 billion) was needed.

Bonomi said the fuel crisis, which has seen the cost of oil and natural gas rise sharply because of shortages attributed to the Russia-Ukraine conflict, worries him more than the pandemic ever did.

Agence France-Presse quoted Giorgia Meloni, the winner of recent national elections in Italy and head of its incoming government, as saying the time has come to "resort to other resources", in the absence of reliable sources of oil and gas and without a European Union strategy to bring down the cost of fuel.

Confindustria said Italian companies will have to spend a collective 110 billion euros more in 2022 for energy than they did in 2019 if nothing is done.

Mario Draghi, Italy's outgoing prime minister, has directed 66 billion euros toward offsetting some of the additional cost, but Confindustria said it is not enough.

However, the government will struggle to find the sort of money Confindustria wants, with economic output falling and likely to continue to do so next year.

The Reuters news agency said the nation's government has already warned of a likely recession next year and a resulting fall in tax revenue. And Meloni has said she does not want to fund extra spending through borrowing because the country has already rung up debts equal to 150 percent of GDP.

Elsewhere in Europe, householders in Germany have been given a temporary partial reprieve from the cost-of-living crisis, with the news that the government is to pay December's gas bills, on the advice of a government-appointed panel of experts.

Easing moves

The move, which will also apply to small and medium-sized businesses, will be followed up by another more detailed payment in the spring. The government hopes the actions will keep prices under control and also incentivize consumers to moderate their usage.

Although it is unclear how much this will cost in total, Siegfried Russwurm, a member of the advisory panel who is also president of the Federation of German Industries, estimated it could be around 90 billion euros.

The panel's co-chair, Veronika Grimm, said subsidized prices would ensure there was a "new normal" based upon which householders and companies could plan, without interfering in such a way as to artificially pull prices back down to the lower levels that were enjoyed before the conflict in Ukraine. The crisis has hit gas supplies to Germany and, consequently, prices particularly hard.

The bill payments will be funded out of the 200-billion-euro relief package announced by Chancellor Olaf Scholz's government last month.

In a jointly written article in The Irish Times newspaper, Paolo Gentiloni, the European commissioner for the economy, and internal market commissioner Thierry Breton said the EU would review the plan.