Monday, 29 June 2009

Italy 2009 Machine Orders To Rise EUR6B After Tax Breaks

Italy 2009 Machine Orders To Rise EUR6B After Tax Breaks

MILAN (Dow Jones)--The Italian machine tools' sector will see orders rise by some EUR6.0 billion this year due to tax breaks passed by the government along with other measures to help lift the economy out of recession.

"This means a 30% increase on the 2009 forecast," Alfredo Mariotti, head of the machine tools manufacturers' board, or Federmacchine, told Dow Jones Newswires Monday.

The Italian government Friday approved tax breaks for companies aimed at helping to counter the worst economic recession in decades, including lower taxes for firms that reinvest any profit in buying new machinery.

The new stimulus package also includes a tax bonus to companies that hold off from cutting jobs, or hire temporary laid-off people, in a bid to limit the rise in unemployment.

"We estimate that at least 20% of our associates will stop using temporary layoff schemes," said Mariotti.

The government of Silvio Berlusconi, which is burdened by Europe's largest public debt compared with the size of its economy, faces a tough balancing act to kick-start the economy.

While tax breaks have the potential to lift business investments, if they are too large they could put pressure on Italy's ability to finance its debt.

The Organization for Economic Cooperation and Development last week cut its 2009 forecast for Italian gross domestic product to a contraction of 5.5%, following a 1% decline last year, which would mark the deepest recession since World War II.

-By Luca Casiraghi, Dow Jones Newswires; +39 02 5821 9907; luca.casiraghi@dowjones.com

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(END) Dow Jones Newswires

June 29, 2009 11:34 ET (15:34 GMT)


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