Italy to Help Businesses with Electricity Costs

Italy moved to help small- and medium-sized businesses with their electricity costs and launched a package of measures to improve investment under legislation introduced last week and detailed to reporters on Wednesday.

Prime Minister Matteo Renzi's government passed a decree on Friday containing a series of minor changes aimed at improving competitiveness, while promised overhauls of the labour market, public administration, the judicial and political system are still in the works.

The measures include 800 million euros ($1 billion) to reduce electricity costs this year and new rules allowing insurers and credit funds to lend directly to businesses.

"These measures will definitely increase the country's potential growth rate," Economy Minister Pier Carlo Padoan told reporters during a joint press conference held with Industry Minister Federica Guidi.

Italy, the euro zone's third-biggest economy, is struggling to grow after a two-year recession and unemployment has soared to nearly 13 percent, its highest level since the 1970s. The 39-year-old Renzi, who took power in February, has said stimulating growth and creating jobs are his top priorities.

Italian companies pay about a third more than the European Union average for electricity, and with the new measures the government "seeks to guarantee" savings of 10 percent, or an average of about 1,500 euros per year, for more than 700,000 businesses, Guidi said.

Some solar power incentives and other energy subsidies will be cut in order to pay for the measure, she said. Low-cost guarantees for electricity for high-speed, private railway services will also be reduced, according to a document outlining the decree.

To help revive investment spending, businesses that invest at least 10,000 euros in machinery or intermediary goods over the next year will be eligible for a tax break in 2016.

The legislation also aims to "ease access to credit for businesses," Padoan said, by removing fiscal disincentives for businesses to raise cash through bond sales and a series of incentives for companies that raise money on the equities market.

($1 = 0.7383 Euros)

(By Steve Scherer and Giuseppe Fonte, Editing by Raissa Kasolowsky)