Statement by Marco Bonometti, President of Confindustria Lombardia

Milan, 26 July 2018 – The economic analysis of the manufacturing industry in Lombardy for the second quarter of 2018 suggests a more cautious outlook following a series of quarters of sustained and consistent growth. While remaining in positive territory, industrial production grew by 0.3%. However, there was a sharp increase compared to the same period in 2017, with a rise of 3.9%. Despite this deceleration, Lombardy's industry continues to close the gap with Europe: the difference with the Eurozone manufacturing production index is narrowing, and the lead over the Italian average is increasing, confirming that Lombardy is performing on par with the four motors of Europe and the United States. This momentum is supported by all production sectors, driven by mechanical engineering, non-metallic minerals, and biomedical instruments, and is consistent across all territories with the sole exception of Pavia.

FOREIGN TRADE - Orders, both domestic and foreign, warrant separate consideration, as they recorded negative variations. The -0.1% in foreign orders and the reduction in the share of foreign turnover for companies serve as an initial warning sign following the threat of trade wars, the paradigm shift in American fiscal policy, and the stalemate in Eurozone decision-making. Confindustria Lombardia is convinced that the escalation of tariffs poses a danger to Italy and that, in the event of a collapse in international trade, Lombardy (which exported goods worth 120 billion euros in 2017) risks suffering a severe shock: a scenario to be avoided at all costs during this phase of slight recovery. For this reason, we must strengthen the domestic market, which, as the second-quarter data shows, remains weak. In this context of uncertainty, business owners' expectations have also been adjusted downwards, contributing to projecting this trend into the near future.

EMPLOYMENT – Employment in Lombardy continues to grow: as evidenced by both the balance between hires and departures (+0.6) and the further decline in the Wage Guarantee Fund (Cassa Integrazione), the regional labour market was vibrant and evolving in the second quarter. This is thanks to cutting-edge active policies, but above all to the willingness of those entrepreneurs who, despite being too often portrayed as the enemy, have every interest in hiring staff, training them, and creating a path for growth in the interest of both the company and the worker, and therefore the well-being of society as a whole. To avoid stifling this vitality, we at Confindustria call for permanent contracts to be incentivised through tax relief and for the tax wedge to be drastically reduced: the latter measure, moreover, would have the dual effect of lowering labour costs and stimulating domestic demand.

Attachments

• economic_statement_Q2_2018_26july2018.pdf
• press_release_Q2_2018.pdf
• manufacturing_appendix_2_2018.pdf