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Bungled EU fund deflates Italian nursery hopes, in blow to Meloni

Bungled EU fund deflates Italian nursery hopes, in blow to Meloni

Reuters20-02-2025

ROME, Feb 20 (Reuters) - When Italian Prime Minister Giorgia Meloni took office in 2022 she inherited a double whammy - the country not only had a worryingly low birthrate, but also low female employment levels.
In an effort to help reverse both trends and boost economic growth, Meloni promised a birth support plan and pledged to create more affordable childcare, confident that this would ease worries about the cost of having babies, and free up mothers to enter the workplace.
But things have not gone to plan, with the twin curses of Italian bureaucracy -- red tape and administrative delays -- forcing Meloni's government to hastily downgrade the project.
The funding is coming from a pool of 194.4 billion euros ($203 billion) in cheap loans and grants that the EU offered Italy to help it recover from the COVID pandemic. The catch is that the money is supposed to be allocated by the end of the spending plan in 2026 and Italy has already revised its programme four times.
Slow spending of the EU funds, a perennial problem in Italy, is one of the reasons analysts say the Italian economy grew a measly 0.5% last year against a government forecast of 1.9% drawn up in 2022, when hopes were high that Italy could leverage the financing to the full.
Economists warn that Italy's already fragile growth outlook will slide further unless it manages to reverse its low birthrate and boost the number of women in the workforce.
Much of the groundwork for the nursery plan had been laid by the previous government led by Mario Draghi, which in 2021 had earmarked some 4.6 billion euros ($4.80 billion) from the EU COVID funds to spend on kindergarten and pre-school projects with the aim of creating 264,480 new places for infants.
Meloni has already slashed the target for new places by more than 100,000 while cutting the funding to 3.2 billion euros, and the state budget watchdog UPB warned last month that the goal might be cut by a further 17,400 places, with time rapidly running out for the government to either spend the EU money or lose it.
"The big flaw in the management of these funds was that Italy did not want to acknowledge until the last minute that many projects cannot be closed on time," said Marco Leonardi, an economics professor at Milan's Statale University and a former aide to Draghi.
'SPEND ALL THE MONEY'
Meloni is negotiating a fifth, final revision of the original EU fund programme with Brussels and local authorities are afraid that more of the promised childcare facilities will get the chop, deemed too bogged down to hit the tight deadline.
"If administrators are afraid of losing funds, they only have to do one thing: close the tender procedures, do it quickly and spend all the money," EU Affairs Minister Tommaso Foti told Reuters.
The Treasury aimed to spend just over half of the 194.4-billion COVID windfall by the end of 2024, but Foti said just 64 billion had been invested so far.
Underscoring the need for action, consumers' union Altroconsumo said in a 2024 report that Italy's less developed southern regions had places for only 16% of local children, while in Italy as a whole, average coverage was just 28%.
By contrast, the European Union average was 37.9%, with neighbours France and Spain achieving a rate of above 50%.
Some towns and cities have already been forced to revise their initial nursery plans and complain that the complexity of applying for, and then disbursing the EU funds, has made it extremely difficult to meet the demanding timetables.
"Fear is always just around the corner ... Every time the government revises the (EU funds) spending plan, it scares those who are not up to speed with the timetable," said Giovanna Bruno, the mayor of the southern city of Andria.
Bruno, whose city has around 100,000 residents, is set to build two new child facilities using the EU funds, but she was forced to cut off an already planned project after the government reviewed previously agreed financing terms.
LOW FEMALE EMPLOYMENT
Luca Dal Poggetto, an analyst at think tank OpenPolis, said the influx of EU funds meant low-staffed local administrations had to manage around 40% more money than they were used to, making it hard for them to cope with the challenge.
"They proved incapable of applying for the projects, and some of those submitted were not suitable to obtain the funding," he told Reuters.
But the stakes are high for Italy to rectify its childcare provision. Its demographics are the worst in Europe in terms of economic growth potential between 2023 and 2040, Scope Ratings said last October, with births in Italy falling for a 15th consecutive year in 2023.
That same year, the female employment rate in Italy was just 56.5%, the lowest in the EU.
These statistics make it imperative for Italy to respond, analysts say.
"Increasing nursery schools helps get more women into the labour force," Milan economics professor Leonardi told Reuters.
"This is crucial to boost economic growth and ensure that there are enough workers to support a growing army of pensioners who also need the state for costly health services."
($1 = 0.9587 euros)

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TRADING DAY Good vibrations turn sour
TRADING DAY Good vibrations turn sour

Reuters

timean hour ago

  • Reuters

TRADING DAY Good vibrations turn sour

ORLANDO, Florida, June 11 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. The US and China have reached a trade deal, or at least agreed on the framework of a deal, which together with surprisingly soft U.S. inflation data, gave markets a lift on Wednesday. But Wall Street's gains were mild, and they were later wiped out by rising tensions in the Middle East. In my column today I look at the 'equity risk premium' and other metrics that suggest relative U.S. equity and bond valuations are getting very stretched. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Good vibrations turn sour It's a "done" deal, according to U.S. President Donald Trump, although the he and Chinese leader Xi Jinping still have to finalize the wording of the trade agreement between the two superpowers and sign off on it. The main points of the deal appear to be: China will remove export restrictions on rare earth minerals and other key industrial components; U.S. tariffs on Chinese goods will total 55%; Chinese tariffs on U.S. goods will total 10%. Trump could not have been more enthusiastic in his praise for the agreement on Wednesday, and Commerce Secretary Howard Lutnick said 'deal after deal' with other countries will follow in the weeks ahead. Yet, judging by the relatively muted market reaction, investors are less enthused. 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They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.

UK agrees to check-free land border for Gibraltar but EU controls for flights
UK agrees to check-free land border for Gibraltar but EU controls for flights

The Independent

timean hour ago

  • The Independent

UK agrees to check-free land border for Gibraltar but EU controls for flights

The UK has reached a deal with the EU over Gibraltar's border with Spain that will allow travellers to cross by land without checks. The agreement on a 'fluid border' clears the way to finalise a post-Brexit deal on the territory with the EU. But those flying into Gibraltar from the UK will face one check from Gibraltarian officials and another by the Spanish on behalf of the EU. This is because the land border will allow those arriving by air access to the European Schengen free travel area unchecked once they are in Gibraltar. The UK and Gibraltar insisted the changes would not affect the British overseas territory's sovereignty. The airport will operate under a model similar to London's St Pancras station, where passengers pass through both UK and French passport checks to board international trains. Goods and customs checks will also eventually be removed in both directions under the agreement. The move could also see airlines start to add flights to Gibraltar from countries other than the UK in a boost to tourism. Officials say a hard border would have been introduced under the EU's incoming exit and entry control system if no deal was reached, causing delays for some 15,000 people who cross the border every day as every individual passport was checked. Talks on rules governing the border have been ongoing since Britain left the European Union in 2020. Foreign Secretary David Lammy said the previous Tory government left behind a situation that 'put Gibraltar's economy and way of life under threat'. He said the agreement was a 'breakthrough' after years of uncertainty. He said: 'Alongside the government of Gibraltar, we have reached an agreement which protects British sovereignty, supports Gibraltar's economy and allows businesses to plan for the long-term once again. 'I thank the chief minister and his government for their tireless dedication throughout the negotiations. The UK's commitment to Gibraltar remains as solid as The Rock itself.' Spanish foreign minister Jose Albares said the deal marked 'a new beginning' in the relationship between the UK and Spain. He said that Spain 'will guarantee free movement of people and goods', adding that Gibraltar would now be linked to the Schengen Area with Spanish authorities controlling entry and exit. President of the EU Commission Ursula von der Leyen welcomed the deal. In a post on X, she said: 'It safeguards the integrity of Schengen and the single market, while ensuring stability, legal certainty and prosperity for the region.' Gibraltar's chief minister Fabian Picardo said the deal would 'protect future generations of British Gibraltarians and does not in any way affect our British sovereignty'. 'Now is the time to look beyond the arguments of the past and towards a time of renewed co-operation and understanding. Now the deal is done, it's time to finalise the treaty,' he said. On Wednesday evening, Sir Keir Starmer spoke with Mr Picardo and thanked him for 'his years of hard work, commitment, and leadership to reach an agreement'. Spanish Prime Minister Pedro Sanchez also had a phone call with Sir Keir, and congratulated the British PM because 'his Government had succeeded where others had failed'. The Conservatives have said they will carefully review the UK's agreement with the EU on Gibraltar's border to see if it crosses any 'red lines' the party set out during its own negotiations when in government. Shadow foreign secretary Priti Patel said: 'Gibraltar is British, and given Labour's record of surrendering our territory and paying for the privilege, we will be reviewing carefully all the details of any agreement that is reached.' Mr Lammy held talks with Gibraltar's leaders, members of the opposition and the business community before leaving the British overseas territory to head to Brussels on Wednesday morning. Gibraltar was ceded to the UK by Spain in 1713 and the population is heavily in favour of remaining a British overseas territory. The last time it voted on a proposal to share sovereignty with Spain, in 2002, almost 99% of Gibraltarians rejected the move. Gibraltar also hosts an RAF base at its airport and an important naval facility.

UK agrees to check-free land border for Gibraltar but EU controls for flights
UK agrees to check-free land border for Gibraltar but EU controls for flights

Rhyl Journal

timean hour ago

  • Rhyl Journal

UK agrees to check-free land border for Gibraltar but EU controls for flights

The agreement on a 'fluid border' clears the way to finalise a post-Brexit deal on the territory with the EU. But those flying into Gibraltar from the UK will face one check from Gibraltarian officials and another by the Spanish on behalf of the EU. An agreement for the future relationship between the EU and the UK in relation to Gibraltar is now a reality. It is a historic agreement. — Fabian Picardo (@FabianPicardo) June 11, 2025 This is because the land border will allow those arriving by air access to the European Schengen free travel area unchecked once they are in Gibraltar. The UK and Gibraltar insisted the changes would not affect the British overseas territory's sovereignty. The airport will operate under a model similar to London's St Pancras station, where passengers pass through both UK and French passport checks to board international trains. Goods and customs checks will also eventually be removed in both directions under the agreement. The move could also see airlines start to add flights to Gibraltar from countries other than the UK in a boost to tourism. Officials say a hard border would have been introduced under the EU's incoming exit and entry control system if no deal was reached, causing delays for some 15,000 people who cross the border every day as every individual passport was checked. Talks on rules governing the border have been ongoing since Britain left the European Union in 2020. Foreign Secretary David Lammy said the previous Tory government left behind a situation that 'put Gibraltar's economy and way of life under threat'. He said the agreement was a 'breakthrough' after years of uncertainty. He said: 'Alongside the government of Gibraltar, we have reached an agreement which protects British sovereignty, supports Gibraltar's economy and allows businesses to plan for the long-term once again. 'I thank the chief minister and his government for their tireless dedication throughout the negotiations. The UK's commitment to Gibraltar remains as solid as The Rock itself.' Spanish foreign minister Jose Albares said the deal marked 'a new beginning' in the relationship between the UK and Spain. He said that Spain 'will guarantee free movement of people and goods', adding that Gibraltar would now be linked to the Schengen Area with Spanish authorities controlling entry and exit. I have always said nothing about Gibraltar, without Gibraltar. — David Lammy (@DavidLammy) June 11, 2025 President of the EU Commission Ursula von der Leyen welcomed the deal. In a post on X, she said: 'It safeguards the integrity of Schengen and the single market, while ensuring stability, legal certainty and prosperity for the region.' Gibraltar's chief minister Fabian Picardo said the deal would 'protect future generations of British Gibraltarians and does not in any way affect our British sovereignty'. 'Now is the time to look beyond the arguments of the past and towards a time of renewed co-operation and understanding. Now the deal is done, it's time to finalise the treaty,' he said. On Wednesday evening, Sir Keir Starmer spoke with Mr Picardo and thanked him for 'his years of hard work, commitment, and leadership to reach an agreement'. Spanish Prime Minister Pedro Sanchez also had a phone call with Sir Keir, and congratulated the British PM because 'his Government had succeeded where others had failed'. The Conservatives have said they will carefully review the UK's agreement with the EU on Gibraltar's border to see if it crosses any 'red lines' the party set out during its own negotiations when in government. Shadow foreign secretary Priti Patel said: 'Gibraltar is British, and given Labour's record of surrendering our territory and paying for the privilege, we will be reviewing carefully all the details of any agreement that is reached.' Mr Lammy held talks with Gibraltar's leaders, members of the opposition and the business community before leaving the British overseas territory to head to Brussels on Wednesday morning. Gibraltar was ceded to the UK by Spain in 1713 and the population is heavily in favour of remaining a British overseas territory. The last time it voted on a proposal to share sovereignty with Spain, in 2002, almost 99% of Gibraltarians rejected the move. Gibraltar also hosts an RAF base at its airport and an important naval facility.

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