Italy: One in Three Businesses Will Not Reopen After Lockdown

Tourist wearing a protective respiratory mask tours outside the Colosseo monument (Colisee, Coliseum) in downtown Rome on February 28, 2020 amid fear of Covid-19 epidemic. - Since February 23, more than 50,000 people have been confined to 10 towns in Lombardy and one in Veneto -- a drastic measure taken …
ANDREAS SOLARO/AFP via Getty Images

ROME — The long-term cost of Italy’s nationwide coronavirus lockdown is slowly emerging as media report that nearly a third of the country’s businesses will not reopen and millions remain without work or income.

The Italian newspaper Il Giornale reported Sunday that one in three stores in Rome and Milan will not reopen their doors and many are not applying for state-guaranteed loans. Moreover, a significant percentage of those who have accepted loans are not expected to be able to repay them.

A study carried out by Confesercenti also found that after Italy’s unprecedented 67-day lockdown, a mere 26 per cent of Italians have resumed shopping for “non-essential” items.

Of the establishments that have reopened, 68 per cent acknowledge to be working so far at a loss, and more than a third (37 per cent) report more that sales are only half of their normal level, with only 17 per cent saying they have maintained revenue levels equal to the pre-virus period.

Italy’s fashion industry has been particularly hard hit, and those who reopened faced stockpiled inventories of Fall-Winter collections, according to Francesca Venturi, founder at Rome-based luxury fashion consultancy Elevate.

Reduced demand for products “Made in Italy” has negatively impacted a long list of fashion and luxury brands including Prada, Dolce & Gabbana, Versace, and Armani, Venturi said.

And while established luxury brands certainly suffered during the pandemic, the smaller, family-run fashion enterprises have borne the brunt of the damage, she said.

Venturi added that the majority of retailers are not immediately rehiring furloughed employees but are waiting to see whether demand takes off again before committing to paying wages.

The tourist industry, on the other hand, which accounts for some 13 per cent of the country’s GDP, has lost all revenue over the past three months and will only recover slowly. Italy will reopen to international travel on June 3rd, but for many, strict regulations on hotels and restaurants will keep numbers below the required profit margin to stay open.

Italy’s service sector risks losing some 4 billion euros of added value in 2020 with the disappearance of about 30 thousand companies and almost 90 thousand jobs, according to a study carried out by Asseprim Confcommercio, a federation of professional services, in collaboration with Format Research.

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