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Internal Market, Industry, Entrepreneurship and SMEs
12 NOVEMBER 2021
Italy - ECSO country fact sheet

In 2020, Italy’s GDP reached EUR 1.6 trillion, representing a decline of 8.9% and 8.2% as compared to the 2019 and 2010 levels.

The number of enterprises in the broad construction sector decreased by 18.5%, from 1,125,499 in 2010 to 916,808 in 2020. This decrease was largely driven by the manufacturing as well as the narrow construction sub sectors, registering the biggest decline in the number of enterprises ( 28.3% and  24.7%) over the 2010 2020 period, respectively.

Similarly, the volume index of production in the broad construction sector decreased by 3.3% between 2015 and 2020. The total turnover of the broad construction sector reached EUR 248.8 billion in 2020, registering a decline of 24.1% compared to 2010 levels (EUR 327.6 billion). With regards to sub sectors, the manufacturing sub sector declined by 29.2%, followed by the narrow construction ( 27.6%) and the architectural and engineering activities ( 20.0%) sub sectors, partially offsetting slight growth in the real estate activities (+2.6%) over the 2010 2020 period.

At the same time, the gross operating rate of the broad construction sector , an indicator of the sector’s profitability, stood at 18.5% in 2018, being a 0.9 percentage point above the 2010 level (17.6%).

With regards to employment, in 2020, there were 2,039,046 persons employed in the broad construction sector in Italy. This represented a 29.8% drop in the number of persons employed from the 2010 levels (2,905,356 persons). This was largely driven by a similar decline in the number of persons employed in the manufacturing sub sector ( 35.0%), followed by the narrow construction ( 33.2%) sub sectors over the 2010 2020 period. The architectural and engineering activities and the real estate activities sub sectors also experienced a drop of 18.4%% and 14.7%, respectively, over the same period.

Number of enterprises in the narrow construction sub sector between 2010 and 2020
Turnover in the narrow construction sub sector between 2010 and 2020

The Italian government also announced several initiatives to promote the residential / housing market. Under its 2021 Budget Law, Italy has extended the timeline for Superbonus 110% deduction up to 30th June 2022. The Italian Government is now considering extending the measure until 2023. The country has allotted EUR 2.8 billion and EUR 18.5 billion for promoting social housing and for investment in energy efficiency housing. The timeline for renovation building bonus has also been extended through 2021.

Under ‘European Green Deal’, the EU and its Member States, including Italy, have set an ambitious target of achieving climate neutrality by 2050. In order to achieve this, the Italian government has allocated EUR 69.8 billion under the 2021 Budget Law. Out of this, EUR 29.6 billion is set aside for energy efficiency and renovation of buildings .

With regards to non-residential and infrastructure construction, under its Budget Law 2021, Italy allocated EUR 32.0 billion for infrastructural investment including EUR 28.3 billion in high-speed railways and road maintenance 4.0 as well as EUR 3.7 billion in intermodal transport and integrated logistics. Italy also intends to implement an advanced digital road monitoring system to improve infrastructure’s safety, digitise its road network as well as adapt it to climate change .

In June 2021, the European Union approved an EUR 191.5 billion COVID-19 pandemic Recovery and Resilience Facility for Italy, consisting of EUR 68.9 billion in grants and EUR 122.6 billion in loans .

As per ANCE estimates, a significant share of the investments and policy measures will be dedicated to, or affecting the construction sector . The bulk of the interventions that will impact the construction sector are described in Italy’s Recovery and Resilience Plan (RRP), and particularly under the missions “Green Revolution and Ecological Transition” and “Infrastructure for sustainable mobility ".

Italy has allocated EUR 32.0 billion towards infrastructure for sustainable mobility. This includes EUR 28.3 billion for investment in high speed network and road maintenance 4.0 as well as EUR 3.7 billion for investment in inter modality and integrated logistics .

With regards to railway works, the programme includes continuation of the construction of various lines such as the Naples-Bari and the Brescia-Verona-Padua railway and the Tortona Genoa high speed railway (also known as third pass of Genoa). Additionally, the infrastructure works planned under the DEF 2020 (ItaliaVeloce Plan) are still in the preliminary design and project review phase and will require longer time to start. In relation to road transport, under the RRP, Italy has allocated EUR 1.6 billion towards road maintenance. The country also allocated EUR 46.3 billion towards the development and promotion of digitisation, innovation and competitiveness within the country. Moreover, Italy has allocated EUR 29.6 billion towards projects related to increasing energy efficiency and redevelopment of buildings, envisaging a series of energy efficiency interventions on public and private buildings aimed at saving at least 0.98 MtCO2 by 2026 .

Presently, the Italian construction sector faces a number of issues including a steep decline in company birth rate and at the same time a rise in company death rate for both the narrow construction as well as real estate activities sub sectors. Secondly, the country is also facing a shortage of skilled labour workforce. There is a significant gap between demand from businesses and supply of training in Italy. Lastly, the Italian construction sector is also hindered by rise in cases of late payment. As per 2020 Atradius Payment Practice Barometer, the total value of outstanding B2B invoices in Italy increased from 31.0% in 2019 to 55.0% in 2020, well above the Western Europe average of 47.0%. Almost 40.0% of the Italian firms concluded that in 2020 payments were delayed by more than one month on average, compared to 2019.

The outbreak of COVID 19 pandemic and its subsequent mutations have further negatively impacted the economic scenario of the country.

Overall, the Italian construction sector has a positive outlook in the medium and long term. Going forward, public sector construction, infrastructure and transport system upgrade are expected to be the primary growth drivers, further supported by EU-backed funding.