Conte Faces New Lockdown Criticism as Italy Set to Reopen

(Bloomberg) -- Prime Minister Giuseppe Conte is facing a growing revolt by Italian business and political rivals against his strategy for ending a nationwide lockdown that's being eased for the first time on Monday.

Criticism of Conte's recovery plans and anger among small businesses left out of the first phase of easing are percolating after almost two months of restrictions that hammered an already recession-bound economy. Pressure to speed up reopening is likely to increase after new deaths and infections blamed on the virus fell to the lowest since the shutdown began on March 10.

Conte, a law professor who took office in 2018 during a populist rebellion against Italy's political establishment, insisted on Sunday that the governing coalition is solid. He pushed back against widespread criticism that he's been excessively cautious.

“There is disappointment among many economic operators,” Conte told La Stampa newspaper. “I understand them. But to restart the economic cycle of goods and services that are less essential, we need customers to feel safe and protected.”

That's just one front for Conte. Former Italian premier Matteo Renzi, who leads a junior coalition party, renewed his threat to withdraw support for the government if Conte fails to address the economic fallout, according to an interview with Corriere della Sera. The euro area's third-largest economy shrank 4.7% in the first quarter, the biggest drop since the series started in 1995, and figures published Monday by IHS Markit showed manufacturing in Italy shrank at the fastest pace since the series began in 1997. Demand also plunged, and factories cut jobs at the fastest pace since 2009.

With Italy still in the throes of Europe's deadliest coronavirus outbreak, more than 4 million people are cleared to return to work on Monday. The reopening includes icons of Italian industry such as Ferrari's supercar factory in the town of Maranello and nearby competitor Lamborghini. Bars and restaurants can't return to normal until the end of May, though eateries can start offering take-out from Monday.

Retailers and owners of small businesses rallied against the government's policy in several cities last week. In Milan, several thousand operators of bars, restaurants, barber shops and other small businesses handed their store keys to local officials to protest insufficient government aid and being left out of the initial reopening.

The premier has come under fire from coalition allies and companies for excessive caution, a lack of clarity on reviving the economy and occasionally confusing rules on social distancing. Plans for an additional 55 billion euros ($60 billion) in emergency spending have been held up for weeks in his cabinet.

A cabinet meeting could be delayed until Thursday amid government division over the next stimulus measures, daily Il Messaggero reported. Conte's office did not immediately reply to a request for comment on a possible delay.

Calls to lift a national lockdown and state of emergency also are surging in Spain, which has the most infections in Europe and the region's second-highest death toll. Like Italy, its tourism-dependent economy has been devastated and Prime Minister Pedro Sanchez is facing criticism for a shaky exit strategy.

New virus deaths in Spain and France, where President Emmanuel Macron faces similar pressure, declined on Sunday to the lowest since at least March 22.

With the pandemic's uneven human toll exposing Europe's north-south divide, Conte's setbacks leading up to Monday include his failure to persuade the continent's German-led camp to back joint euro-area debt issuance for the recovery.

Italy's first-quarter decline only captures the first days of the lockdown that eventually halted all non-essential economic activity on March 23. Italy's government forecasts the economy will shrink 8% this year, while Bloomberg Economics sees a 13% contraction.

Given the human toll, Italy appears particularly vulnerable as public calls for a return to normal life increase. But the U.K., now free to chart its course outside the European Union, is facing a similar situation as its death toll closes in on Italy's. Another 315 fatalities reported on Sunday brought the total to 28,446.

While the U.K. isn't set to unwind the lockdown and an Observer poll showed two-thirds opposed lifting it, the government says the peak of the outbreak has passed. Prime Minister Boris Johnson — back at work after receiving intensive-care treatment for Covid-19 — is preparing guidance for the next steps of the crisis, including whether employees need to wear protective equipment and how transport should be used.

Italy's 174 new deaths on Sunday increased the total to 28,884, the second-highest after the U.S. Conte warned that reopening carries the risk of a spike in infections if people don't observe precautions.

“The more scrupulous we are, the sooner we will be able to regain other spaces of freedom,” he said in a Facebook post. “We won't squander what we have painstakingly achieved.”

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