Italy Locks Down Rich North as Conte Tries to Contain Panic

Alberto Brambilla, John Follain and Alessandro Speciale
Italy Locks Down Rich North as Conte Tries to Contain Panic

(Bloomberg) -- Italian Prime Minister Giuseppe Conte tried to contain the alarm spreading through Europe’s fourth-biggest economy, unveiling drastic measures in the middle of the night to restrict the spread of the deadly coronavirus.

In a hastily convened news conference Sunday morning, the head of a government already hanging by a thread said that Italy will dramatically restrict movement and activity for a quarter of its population in the economic powerhouse that is the region around Milan.

As news of the measures leaked, some Italians gave their reactions. Images and posts on social media showed people rushing to get on the last train out and escape a virtual lockdown amid some of the most sweeping anti-virus measures outside China. Schools have already been shut as tourism has ground to a halt and businesses take a hit in a country already on the brink of recession.

Conte’s latest effort at damage control comes as cases surged to 5,883 on Saturday with 233 deaths, and as Nicola Zingaretti, the leader of one of the two major government parties, announced he had contracted the illness.

Yet the premier’s late appearance, and his criticism of “unacceptable” leaks, did little to dispel concern that this was a government with a tenuous grasp of a rapidly evolving national emergency. Conte said he would take “political responsibility” for managing the crisis.

Market Reaction?

A key test of whether he succeeded will come Monday, when investors will assess the impact of his actions on Italy’s already weakened economy.

Spreads between Italian and German bonds have crept up since the coronavirus crisis erupted but have so far remained below the average of the past year. A spike in yields would put a further strain on Italy’s debt just as the government prepares to widen the deficit to prop up the economy.

Conte’s announcement came after an early draft of the new rules did the rounds and sparked confusion. Images abounded of Italians crowding trains from Milan and the north to make their way south before restrictions came into force. Train travel between northern and southern Italy appeared normal Sunday morning.

The regulations are set to come into force “within hours,” Conte said. They are to last until April 3, according to the draft seen by Bloomberg. A final text is still to be published.

The bans will stop anyone from entering or exiting the most-affected areas, while movement inside will be allowed only for demonstrable business or health reasons, the draft said. Skiing, public events, religious ceremonies and work meetings will be suspended, while schools, museums, swimming pools and theaters will close.

Bars and restaurants will have to make sure patrons keep at least one meter apart or they’ll be shut. The decree specifies that failing to respect the measures is a criminal offense, and might lead to imprisonment. Police and the army will be responsible for ensuring that containment measures are respected.

Some of the affected regions began signaling their resistance on Sunday morning. The Veneto region opposes the inclusion of the Padua, Treviso and Venice provinces in the decree, according to a statement published by Ansa. Maurizio Rasero, the mayor of Asti, which is in the affected zone, called the ban “madness, a disaster we didn’t expect.”

About 16 million people will be affected by restrictions across Lombardy and in 14 provinces around cities including Venice, Modena, Parma, Rimini and Treviso. A large part of the Piedmont region is also affected but not Turin, the regional capital and the headquarters of Fiat Chrysler Automobiles NV.

A second decree with new containment rules for the rest of the country recommends citizens avoid travel outside their hometowns unless absolutely necessary, and restricts public events from demonstrations to theater shows.

With Italy’s economy already about to contract before the outbreak, the crisis has all but paralyzed business activity in Lombardy -- which accounts for a fifth of the country’s gross domestic product -- and the rest of the north, Italy’s economic engine.

The government decided on Thursday to double emergency spending to 7.5 billion euros ($8.5 billion) to help cushion the economic impact of the virus.

It’s also calling up 20,000 doctors, nurses and medical personnel to help deal with the outbreak. Fallout from the virus’s spread is slamming Italy’s key tourism industry at a time when the country is already teetering on the brink of recession.

The European Commission’s top economic officials approved Italy’s spending plans, saying in a letter to the government in Rome that its stimulus plans won’t be factored in when assessing the country’s compliance with the European Union’s fiscal rules.

(Updates with Veneto region reaction in 12th paragraph.)

--With assistance from Daniele Lepido, Tommaso Ebhardt, Alessandro Speciale, Sonia Sirletti and Ross Larsen.

To contact the reporters on this story: Alberto Brambilla in Milan at abrambilla5@bloomberg.net;John Follain in Rome at jfollain2@bloomberg.net;Alessandro Speciale in Rome at aspeciale@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Flavia Krause-Jackson, James Amott

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