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 Among the more significant measures in the package, approved by
parliament late on Thursday, are a reduction in energy costs for
small and medium-sized companies, a tax credit for firms that make
new investments in machinery and new rules allowing insurers and
credit funds to lend directly to business.
Minor measures affecting areas from agriculture to the environment
were also included.
The plan, dubbed the "competitiveness decree" when it was presented
by Renzi in June, has got a lukewarm reception from business leaders
who said it lacked a clear strategy and failed to address the real
needs of industry.
Data this week showed the euro zone's third-biggest economy
unexpectedly fell back into recession in the second quarter,
contracting for the 11th time in the past 12 quarters.
On Thursday, European Central Bank President Mario Draghi, in
unusually direct comments, said Italy had not done enough to reform
its labor market, bureaucracy or judicial system, resulting in an
unfavorable climate for investment.
The economy is now expected to post little or no growth this year,
compared with the government's official forecast in April of a 0.8
percent expansion, creating negative repercussions for Italy's
strained public finances.
Renzi said he agreed with the ECB chief's comments and they were not
a criticism of his government. In a television interview on Thursday
he insisted his economic strategy was sound and would eventually
lift the country out of crisis.
"We will work better and harder, but I promised to change direction,
not to change the universe in three months time," Renzi said, adding
that only a "comic book superhero" could turn around the economy in
a matter of months.
"Calmly, serenely, we are taking this country by the hand and
pulling it out of the crisis," said Renzi, who has promised to turn
the economy around with a comprehensive strategy over the next 1,000
days.
LACK OF URGENCY
Analysts are increasingly questioning whether Italy can afford such
a gradualist approach.
Riccardo Barbieri, chief European economist at Mizuho, said in a
research note on Friday that Renzi's honeymoon is over. He forecast
the economy would shrink by 0.2 percent this year and urged a
re-think of Renzi's reform agenda in the report titled "Italy cannot
wait 1,000 days."
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The latest support package underwent numerous changes during a
difficult passage through parliament and finally secured 155 votes
to 27 against in a confidence vote in the senate as the government
tries to rush through legislation before the summer recess.
Prominent industrialist Alberto Bombassei, chairman of brake-maker
Brembo BRBI.MI, said the competitiveness decree had too many minor
measures and was of no help to business which would benefit far more
from a reduction in corporate tax rates.
"It seems a clear sign that the government has lost its direction at
the moment," he said in an interview in La Stampa daily on Friday.
Renzi's main economic stimulus approved so far has been an income
tax cut of up to 80 euros per month for low earners, effective from
May, while plans for a broad reform of rigid labor market rules have
been put back to 2015 at the earliest.
The prime minister, who took office in February, is facing criticism
for focusing more on long-term institutional reforms than urgent
economic measures as concerns grow that Italy's economic weakness
and huge debt are a threat to the broader euro zone.
On Friday the Senate is due to give its first approval to Renzi's
plans to abolish the Senate as an elected chamber, the first
significant step in its passage through parliament, which will take
many months and may require a popular referendum to become law.
(Editing by Susan Fenton)
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