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‘There is no money left’: southern Italy’s poor pummelled by Covid



For the past 30 years, Grazia Santangelo has been making a living selling books and jewellery from a stall at the Ballarò street market in Palermo.

It is one of the oldest and liveliest markets in southern Italy — but now it is almost deserted. Because of the coronavirus crisis, 62-year-old Mrs Santangelo has lost almost all of her clients and is struggling to pay for basic necessities such as food and medicine.

Now that a second round of restrictions has come into force, she says she is lucky to earn €3 a day.

“I’m at my wits’ end,” Mrs Santangelo said in a phone interview. “The vibrant atmosphere of the beating heart of our city is gone. Everyone is really anxious. There is no money left.”

About 30 per cent of Italy’s population have been hit by a fall in their household income as a result of measures taken to contain the virus, recent research by the Bank of Italy found.

Household spending fell 11.5 per cent in the second quarter of 2020 compared with the previous three months, according to the national statistics office.

Almost half of the people who turned to Caritas — the charitable arm of the Italian Bishops’ Conference — between May and September did so for the first time.

The worst affected are those living in the country’s south, in particular the most vulnerable, those living on the outskirts of cities and in rural areas, and those engaged in Italy’s vast informal and undocumented economy, according to economists.

Grazia Santangelo has lost almost all of her clients at her market stall and is struggling to pay for basic necessities © Benni Priolisi

The share of people in employment has plunged by more in southern Italy than in any other region. Employment rates were already low before the pandemic and just over two in five of the south’s working-age population were in work in the second quarter, in contrast with two in three in the north.

The hit to households’ income, net of government support, was larger in the south than in the north, data from the Bank of Italy published this summer showed.

And although southern Italy experienced a less severe health emergency than the north in the early stages of the pandemic, it has recently experienced a resurgence of the virus, which threatens to cause fresh economic damage.

“Although the north is suffering greatly from production inactivity, in the medium term, when we come out of the crisis, there will be a stronger rebound in territories with most infrastructure and highly specialised jobs, while the most disastrous consequences will be in the more fragile territories where digital services and infrastructure are lacking,” said Valentina Meliciani of LUISS University in Rome.

Column chart of Employment rate, by region (%) showing Italy's south falls further behind

In Sicily, lockdown “was a catastrophe for many people who were already in a precarious economic situation, often forced to work without a regular contract and out of the institutional safety net, who found themselves without income overnight”, said Valeria Leonardi from SOS Ballarò, a neighbourhood committee in Palermo. She expected the new curbs to exacerbate the situation.

Even before the pandemic, southern Italy had a lower proportion of the population in employment than any other region in Europe, a larger informal sector and poor job prospects — especially for young people and women. Up to half of the population in some areas faced a high risk of poverty and social exclusion.

Southern Italy also has a prevalence of temporary and lower-paid work and jobs involving physical proximity, such as retail, hospitality and entertainment, which are bearing the brunt of the economic fallout. More than half of children from poor families in the south are without internet at home, so they cannot attend online classes during lockdowns.

Bar chart of % of people at risk of poverty or social exclusion (2018), by region showing More people at risk of poverty in Italy's south even before the virus

Massimo Rodà, a senior economist at Confindustria, warned that the “economic consequences of this situation could last for several years, especially in the south, and could be stronger for the younger and less qualified section of the population”.

Rome has pumped billions of euros into the economy and launched a new poverty relief scheme, in addition to the citizens’ income, which was approved before the pandemic and is thought to have lowered the level of poverty for the first time in four years.

About 4.6m people, or 7.7 per cent of the population, lived in absolute poverty in 2019, compared with 8.4 per cent in 2018, Istat data show.

Bar chart of % of non-essential workers who could work remotely (March 2020) by area showing Remote working is less common in southern Italy

Despite receiving government benefits, Domenico Palaia, a 52-year-old unemployed baker in Satriano, a small town in Calabria, said that he could barely afford to feed his family. Calabria is one of the poorest regions in Europe.

Mr Palaia lives in an apartment with his wife, two children and his 84-year-old mother, who receives a small pension.

He was already discouraged by the search for a job before the crisis hit. Now, he said, he has lost hope. “I am not sure why I haven’t gone crazy yet,” he said. “Lockdown after lockdown, if this virus doesn’t give us a break, we are completely lost.”

Domenico Palaia and his family at home in Satriano, Calabria
Workers protest against new Covid-19 restrictions in Catania © Orietta Scardino/EPA-EFE

Unlike Mr Palaia, some people do not qualify for the citizens’ income or other government benefits, because they work in Italy’s informal sector.

“The main policies implemented by the government tend to favour the categories that are already partly protected, with a salary and a regular contract. But if a worker is self-employed he or she is more exposed, and if they are part of the black economy, they could be completely cut off,” Mrs Meliciani said.

Maria Grazia Brighina, 51, is one such worker. She lives in a council house on the outskirts of the Sicilian town of Mirabella Imbaccari with her brother and parents. She is frustrated that the government is not doing enough to help them.

“We’re in a desperate situation,” she said. “Stuck between the impossibility of finding any work and the fear of the virus, in a land that had already been forgotten way before the pandemic.”

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EU and US agree to suspend tariffs in Airbus-Boeing dispute




The EU and US have agreed to suspend punitive tariffs related to their longstanding feud over aircraft subsidies, in the first breakthrough in trade relations since President Joe Biden took office. 

The two sides reached a deal after intensive talks, according to people familiar with the discussions, in a sign that the 16-year-old transatlantic trade battle over state aid to Airbus and Boeing could be coming to an end. 

The accord, announced by Ursula von der Leyen, European Commission president, means both sides will suspend tariffs linked to the dispute for four months. The duties have hit products ranging far beyond aircraft, encompassing an eclectic array of goods such as US self-propelled shovel loaders, French wine and even US ornamental fish.

In a statement issued after a call with Biden, von der Leyen said: “President Biden and I agreed to suspend all our tariffs imposed in the context of the Airbus-Boeing disputes, both on aircraft and non-aircraft products, for an initial period of four months.

“We both committed to focus on resolving our aircraft disputes, based on the work of our respective trade representatives,” she said.

The goodwill gesture is intended to prepare the ground for negotiations on a permanent solution to the dispute by setting joint rules on permissible aircraft subsidies.

The US trade representative’s office said that a settlement was needed to address challenges posed by new entrants to the aircraft sector from China. Beijing has made it a priority to break the global duopoly that has dominated for decades.

It added that limits on future subsidies and monitoring and enforcement mechanisms would be part of a deal between the EU and US.

A European official said the announcement came “earlier than expected”, given that Biden’s nominated trade representative Katherine Tai has yet to be confirmed. Countering China and setting transatlantic standards for the aircraft industry were keys goal, the official said.

One European diplomat said that four months would be “enough time to focus minds while still being very do-able”.

The deal came a day after the UK and US came to their own arrangement whereby Washington also agreed to suspend punitive tariffs linked to the dispute for four months.

The UK had already unilaterally stopped imposing its own tariffs at the start of this year. EU officials and other trade experts have questioned whether the UK would have had the right to continue to impose them anyway, given its exit from the bloc’s customs union.

Brussels imposed extra tariffs on $4bn of US goods in November, covering a wide range of products including sugarcane molasses, casino tables and fitness machines. 

By then the US had already imposed extra duties on $7.5bn of European exports — the result of Washington’s own World Trade Organization victory against aid to Airbus. 

Brussels sees today’s step as a breakthrough that can pave the way for broader co-operation on trade after the tensions of the Trump era — tensions that at times threatened to boil over into a full-scale trade war.

The US-EU aircraft subsidies dispute is one of the longest-running cases in WTO history. Both sides have been found over the years to have failed to properly implement WTO panel rulings on illegal subsides. 

The battle dates back to 2004, the year after Airbus overtook its US rival in terms of deliveries for the first time. Having earlier brokered an agreement with the EU on state aid in 1992, the US launched a case against subsidies for the European group that dated back to the 1970s. Initially the US claimed that $22bn in illegal funding had been given to Airbus.

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The EU followed up a few months later with a challenge of its own, originally claiming $23bn in illegal aid was offered to Boeing.

The two sides have long remained far apart on the terms of any agreement on how to fund new aircraft development. But with both Airbus and Boeing focused on recovering after the coronavirus pandemic and a hiatus in new commercial aircraft development, industry experts said the timing was right.

The deal will come as a relief to aircraft manufacturers and other businesses on both sides of the Atlantic. French wine producers and Italian cheesemakers have been among those in the vanguard of calls for an end to the dispute. The spirits industry has also been among the US sectors strongly urging a solution. 

Airbus welcomed the decision to suspend tariffs. The company said it supports “all necessary actions to create a level-playing field and continues to support a negotiated settlement of this longstanding dispute to avoid lose-lose tariffs”.

Boeing said it hopes the deal would allow for talks to “bring a level playing field to this industry”.


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US suspends tariffs on UK exports in Airbus-Boeing trade dispute




The US will temporarily lift punitive tariffs on £550m worth of UK exports such as Scotch whisky and Stilton cheese, imposed as part of a row with the EU over subsidies to Boeing and Airbus, in an attempt to de-escalate one of the longest trade disputes in modern history.

The move follows the UK’s unilateral decision to suspend tariffs against the US from January 1, which took both Brussels and Airbus by surprise. Brussels has disputed that the UK had the right to act unilaterally in a trade dispute between the EU and the US when it has left the bloc.

Liz Truss, UK international trade secretary, said she was delighted that US president Joe Biden had agreed to suspend tariffs on UK goods for four months. The move would help to improve transatlantic relations, she said.

The US trade representative’s office confirmed that it would temporarily suspend the tariffs, to allow time to negotiate on settling the aircraft dispute.

The Johnson government has come under heavy fire over the tariffs in particular from the Scotch whisky industry, whose exports to the US plunged 30 per cent last year.

“The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenmorangie, the more money those producers will have to invest in their businesses, their staff and futures,” Truss said. “Trade equals jobs.”

The US-EU aircraft subsidies dispute is one of the longest-running cases in the World Trade Organization’s history, reflecting the importance of the industry to each side and the intense competition between Boeing and Airbus.

The battle dates back to 2004, the year after Airbus first overtook its US rival in terms of deliveries. Both sides have been found guilty of providing billions in illegal subsidies to their aircraft makers.

Brussels was last year given the green light by the WTO to impose tariffs of up to 25 per cent on $4bn worth of US products, after Washington announced duties on $7.5bn worth of European imports. 

Both Boeing and Airbus welcomed any move that could help to bring the two sides together. “We welcome USTR’s (US Trade Representative) decision to suspend tariffs for allowing negotiations to take place,” Airbus said in a statement. “Airbus supports all necessary actions to create a level-playing field and continues to support a negotiated settlement of this longstanding dispute to avoid lose-lose tariffs.”

Boeing said: “We commend this action by the US and UK governments creating an opportunity for serious negotiations to resolve the WTO aircraft dispute. A negotiated settlement will allow the industry to move forward with a genuinely global level playing field for aviation.”

However, Britain’s departure from the EU has raised questions about how effective any UK-US suspension can be. With no precedent to follow, trade lawyers have said it is unclear whether the UK still had a right to impose or suspend tariffs that were granted to the EU. 

Whitehall officials insisted the UK had the right to revoke retaliatory tariffs. One individual close to the process said: “This whole issue shows the benefit of being an independent trading nation . . . if we can get this done, it paves the way to a deeper trading relationship with the US and will help free trade deal negotiations.”

Despite this, there appear to be very few signs of progress in the trade talks between the US and UK. In January, White House press secretary Jen Psaki indicated that securing a deal would not be a priority for the Biden administration.

Last month, Biden’s nominated top trade adviser Katherine Tai told senators that she would “review the progress” of the talks that had taken place between the two sides over the previous two and a half years.

Both the EU and the US have long argued for a resolution to the dispute, but have remained far apart on the terms of any agreement on how to fund new aircraft development. 

After Biden’s election as US president, there was a feeling in Europe that a deal could be within reach. There has been growing speculation that talks were progressing.

However, in late December, the US further raised tariffs on European goods, specifically targeting French and German products.

The EU has said it is in intensive talks with the US in a bid to quickly secure a deal to remove punitive tariffs. 

“We have proposed that both sides agree to suspend tariffs for six months,” a European Commission spokesperson said. “This will help restore confidence and trust, and thus give us the space to come to a comprehensive and durable negotiated solution.”

A US administration official said that while he could not indicate whether there were plans to imminently remove the EU tariffs, the Biden team was continuing to review the dispute. “The goal is to resolve the dispute and create a level playing field,” the official said. 

Both Brussels and Washington are keenly aware that the rules need to be set before China becomes a significant competitor to Boeing and Airbus.

China is expected to be the fastest-growing market for commercial aircraft over the coming decades and Beijing has made it a strategic priority to break the global duopoly in an attempt to claim some of that market for Chinese industry. Later this year, China’s Comac is expected to have fully certified its first major commercial aircraft, the C919 single aisle.

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FC Barcelona and Real Madrid will be forced to pay back illegal state aid




FC Barcelona and Real Madrid will be forced to pay back millions of euros in illegal state aid after the EU’s highest court ruled Brussels was right to declare that beneficial tax arrangements they enjoyed for a quarter of a century were illegal.

The decision by the European Court of Justice upholds previous rulings by the European Commission and comes as Barcelona, the world’s highest-earning football club, is enduring one of the biggest crises in its history. 

This week police arrested the club’s former president, its current chief executive and its general counsel, in connection with a separate legal case ahead of a vote on Sunday to decide its next president. Barcelona, which recorded a loss of €100m last year, also has to contend with a debt pile of more than €1bn.

In 2016 Margrethe Vestager, the EU’s competition chief supremo, ordered four Spanish football clubs to pay back tens of millions of euros received since the 1990s in the form of sweetheart property deals, tax breaks and soft loans.

FC Barcelona subsequently contested the decision before the General Court, the EU’s second-highest tribunal, which annulled the commission’s judgment. However, after a final appeal from Brussels the ECJ ruled in favour of the EU.

In its decision on Thursday — which is final — the ECJ deemed the tax scheme “liable to favour clubs operating as non-profit entities over clubs operating in the form of public limited sports companies”, holding that it could therefore qualify as illegal state aid under EU rules.

The General Court had previously annulled Brussels’ decision over what it said was lack of sufficient evidence that the tax arrangements offered to the four football clubs, which also include CA Osasuna and Athletic Bilbao, were illegal.

But the commission had questioned the court’s “heavy burden of proof” on regulators in its appeal, arguing that a lower tax rate was obviously more favourable than a higher one.

The ECJ argued that the difficulty in assessing the extent of state aid — because of the complexity of tax deductions — did not preclude the commission from banning government practices that it considered gave sports clubs unfair advantages. 

It said: “The impossibility of determining, at the time of the adoption of an aid scheme, the exact amount, per tax year, of the advantage actually conferred on each of its beneficiaries, cannot prevent the commission from finding that scheme was capable, from that moment, of conferring an advantage on those beneficiaries.”

The Spanish government said on Thursday it had “absolute respect” for the court’s decision. FC Barcelona and Real Madrid did not immediately respond to requests for comment.

The judgment will be seen as a big win for regulators in Brussels who have for years been trying to stop highly successful commercial clubs from freeriding on the back of taxpayers.

The European Commission said on Thursday it noted “the judgment by the Court of Justice to follow the Commission’s arguments”.

Thursday’s ruling is the second time Brussels has won an appeal of its state aid decisions in recent weeks. Last month judges at the General Court rejected a legal challenge by budget airline Ryanair to state aid given to rivals on discriminatory grounds.

At present Barcelona is dealing with the fallout of what the Spanish media dubs Barçagate — allegations, denied by the club, that it corruptly hired outside groups to defame former president Josep Maria Bartomeu’s adversaries on Facebook.

Bartomeu was temporarily detained by the Catalan police earlier this week. He, the club, and other individuals in the case, which is being investigated by a Barcelona court, have all denied any wrongdoing.

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