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Italians Fall on Tough Economic Times

December 03, 2008 10:06 AM

By PHOEBE NATANSON, ABC News Rome

Italians are hunkering down to a gloomy holiday season in the midst of news of crashing stocks, Alitalia's bankruptcy, plummeting house prices and soaring consumer costs. Papers are filled with ads desperately offering low-cost event listings; travel agencies are temptingly advertising discount vacations; and supermarkets have introduced weekly cut-price foodstuffs.  One megastore has even introduced occasional "shopping races” to incite sluggish shoppers: all you can pile into your shopping cart in a minute for free with the lucky contestants tearing down the aisles choosing the priciest items.

Hard times are even striking at the heart of traditional centuries-old rituals here.

More than 40 percent of Italians have cut their daily stops at the bar for their beloved espressos and cappuccino breakfasts. About 15 million Italians still go to the bar at least once a day in Italy but "fully a third are getting their coffee elsewhere and only dropping into the bar two or three times a week," said Lino Stoppani, head of the national bar-owners association. Bars in Rome quickly responded by promising a price freeze on espresso and offering "special breakfast" prices to lure tourists. The association is also encouraging bars to bring the price of the smallest ice cream cones back down to $1.25. Well, that should make the tourists happy at least: Most Italians don't eat ice cream during the winter.

Italy was already on the brink of recession before the latest global financial crisis hit.  Everyone here knows that Italians are growing older and poorer as Italy's economy quietly slips behind that of other European countries.

In October, the Catholic charity Caritas announced that 7.5 million Italians – 13 percent of the population - are living below the poverty line on less than $476 a month. If you count the Italians who are living above the poverty line with an extra $7-$39 per month - a total of 15 million people - one in four Italians is facing rough times.

And it is becoming apparent. More and more Italians are visiting soup kitchens or lining up in front of charities for food ration handouts. Increasing numbers of Italians are waiting outside a Milan charity for the doors to open at 8 each morning to receive free bread, milk, fruit and vegetables each day. Just a year ago there were only about 85 Italians among the immigrants waiting but this year the number has risen steadily to about 350 each day.

Most in line admit that they never expected they'd have to resort to this. "I have a pension of 400 Euros ($506) and an unemployed son of 40 to feed too. I just can't make it though the month," said a sad pensioner interviewed on Italian state TV. The reporter went on to interview elderly Italian couples painstakingly studying prices and special offers in a starkly empty supermarket. They rarely buy meat now and always only choose seasonal discounted vegetables and fruit, they said. 

The cost of pasta is almost 25 percent more than its cost last year and bread is up 8.6 percent, enough to depress any Italian just at the thought!

Italy’s conservative government led by Prime Minister Silvio Berlusconi - one of the richest men in Italy - has responded to this dire situation with a mix of upbeat advice, reassuring news and emergency financial decrees. 

Just last week the Italian government announced an experimental program to come to the rescue of about 1.3 million needy Italians, especially the elderly and low-income families with small children.  The neediest - those with annual incomes of $5,000 or less - will receive a new "social card" by Dec. 31. The card, which looks like a credit card, will grant discounts in certain chain stores and be “credited” monthly with 40 Euros ($56) at the post office. The cards will arrive credited with 120 Euros ($152) for the last three months. Many old people said they would be ashamed to use the card in public and said it reminded them of hard times during WWII.

The majority of Italians reacted to the news with scoffs and shoulder shrugs seeing more layoffs and small-business closures ahead. On Friday the government unveiled further emergency financial measures that were met with skepticism by economists. "This is not even an aspirin, it’s not even half an aspirin!" said Tito Boeri, professor of economics at Milan's Bocconi University. The new measures include a temporary freeze on energy prices and road tolls, help for mortgage holders, tax breaks for poorer families and some easing of direct and indirect business taxes.

Berlusconi believes one way of fighting consumer gloom is by thinking positive. "There is nothing better to resolve deep crisis than an atmosphere of optimism," he said speaking at a business conference last week. "Citizens must not give up their habits and purchases, it’s all up to them. … If people are swept up by pessimism, that creates a negative spiral."

A disgruntled Italian housewife on the TV news was not buying it. "The more he tells us all is fine and we just need to go out and shop the more I am terrified," she said.

Read more blogs from Phoebe Natanson

Read more blogs from the ABC News Staff

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