CERNOBBIO, Italy (Reuters) - U.S. computer company Hewlett-Packard (HPQ.N) is considering increasing investments and hiring new workers in Italy after years of downsizing, because, it says, it has faith, for the first time in a while, that the country is on the mend.
“There is a lot still to be done, but the glass now is looking half-full,” said Stefano Venturi, the group’s corporate vice-president and its chief executive in Italy, where it has three data centers and 5,000 employees.
His words echoed the cautious optimism in the air at an annual forum of corporate and financial leaders that has long been a barometer of the nation’s business mood.
A fledgling economic recovery after the longest post-war recession is giving companies cause for hope, while Prime Minister Matteo Renzi says his ongoing reform agenda is helping turn around the euro zone’s third largest economy.
Over the past 18 months, Renzi has tackled the labor market, the banking sector, education and the public administration, among other areas, even though few reforms are yet operational and their long-term impact remains to be seen.
Renzi turned up at the meeting to reel off his achievements in a speech followed by two hours of questions from foreign and domestic participants on the future of Italy.
All the executives said there was much more to be done to bring Italy’s growth in line with the rest of Europe, tackle stifling bureaucracy and corruption, speed up the justice system, cut taxes and keep control of tottering public finances.
But the overall atmosphere was in sharp contrast to last year’s gloomy discussions over the crisis and impatience at the lack of progress, and an internal poll showed 69 percent of participants had an excellent or good assessment of Renzi.
“My view of the government is very positive. Italy is out of the recession and for the first time in I don’t how many years they are talking of raising the growth forecast,” said Federico Ghizzoni, CEO of top Italian bank UniCredit (CRDI.MI). Italy’s growth estimate of 0.7 percent this year is below the European Union average, while Renzi’s government has so far failed to cut a huge public debt of 2 trillion euros.
EU authorities and the International Monetary Fund still say Italy is too slow in making structural reforms to tackle what they see as the asphyxiating influence of vested interests from unions and professional groups to taxi drivers. Renzi, who last year skipped the Ambrosetti conference on the shores of Lake Como to visit instead a hydraulic equipment plant, this time turned up to boast about his accomplishments and promise more reforms in the next 2-1/2 years before elections. “Italy is no longer a problem for Europe,” he said, adding that during his tenure 25 percent of the nearly 1 million jobs lost during the crisis had been recovered. He said this was thanks to his labor market reform which eased firing restrictions and offered temporary tax breaks for companies that hire workers on permanent contracts. Though economists say it is way too early to tell is his “Jobs Act” is having any impact on unemployment, entrepreneurs praised Renzi for taking on trade unions and other lobby groups, changing the perception of Italy as a country impervious to change.
“He’s done things in 18 months that weren’t done in the past 40 years. He’s broken taboos - on jobs, banks, the justice system,” said Venturi.
“For foreign investors like us, 50 percent of the decision to invest money in a country depends on the credibility of its leaders. There’s faith he can take Italy out of the doldrums.”
Sandro De Poli, CEO and Chairman of General Electric (GE.N) in Italy and Israel, said Renzi was “at least a straight-talker who gets to the point and explains how he plans to reach his goals.” In his speech, Renzi said the business world should also change its ways and that the days of the ‘salotto buono’ – a system based on influence and connections that has bound top Italian companies together for decades - were over.
Additional reporting by Valentina Za and Gianluca Semeraro; Editing by Robin Pomeroy