What Recovery and Resilience? Italy Looses 3% Resilience in One Year


Italy, just like other European countries, has launched last year a National Recovery and Resilience Plan. The plan is funded by the EU in the framework of the NGEU – Next Generation EU – initiative, and Italy’s share corresponds to 191.5 billion Euros, to be spent in the period 2021 – 2026. The aim is to mitigate the economic and social impact of the response to the coronavirus which has devastated European economies and societies, causing the destruction of hundreds of thousands of businesses due to irrational and unscientific lockdown policies and blind restrictions. The objective is to make the European economies more sustainable and resilient. At least that is the theory. Or should we say “theory”, as the National Resilience and Recovery Plans are only based on a “let’s become more resilient” approach and not on a rational approach, whereby one measures and monitors the effective results of the efforts to “become more resilient” by measuring resilience. That would be the logical approach, but politics is not where one finds logic. Opinions, not science, is what matters.

Of the total budget for the plan of 806.9 billion Euros, The Recovery and Resilience Facility makes €672.5 billion (in 2018 prices) in loans and grants available to support reforms and investments undertaken by Member States. The fact that resilience is not measured and monitored has a few immediate consequences. First of all, if we don’t know what our resilience was in 2021, and what it will be in 2026, how can we know if the goal of the recovery – to be resilient – has been attained? How can one measure the success of a project if one doesn’t measure anything? Secondly, not measuring the outcome of the therapy as it is administered relieves everyone of any responsibility. If there are no numbers on the table how can anyone be guilty of an almost certain failure. Thirdly, the one goal of this massive plan that comes to mind is to increase the levels of debt in the EU and, of course, to move around huge amounts of money. Spending billions on digitization, electric cars or windmills doesn’t guarantee and increment of resilience. Speaking of sustainability doesn’t make one more sustainable. What is necessary – not sufficient – for sustainability is high resilience. However, if the goal of a Recovery and Resilience Plan is not resilience, it certainly won’t be sustainability.

One does not need to wait much in order to appreciate the consequences of such an approach. Fortunately, our research team measures and monitors resilience of companies, investment portfolios, countries and macro-regions. Using data from EUROSTAT and national statistics bureaus, such as the Italian ISTAT, we measure and track the resilience of the EU and all member states on a quarterly basis. Since the EU has launched the Recovery and Resilience Plans this activity has become increasingly interesting and relevant. This short article focuses on Italy as the country has been the target of lockdowns and irrationally harsh restrictions that have been particularly successful at crippling its economy. Even the Confindustria – the main association representing manufacturing and service companies in Italy – has recently expressed concern as to the future of many of its over 150 000 members. Strangely, this concern is based on the estimates of the impact of the very recent conflict in Ukraine, and not a result of the destructive economic policies of the Italian government. In fact, Italy has recently decided to increase military spending, which will surely boost the defence industry and its immense supply chain.

But let’s look at some numbers. Over the last three quarters, that is since the National Recovery and Resilience Plan has started, the resilience of Italy has fallen by 3% and by 16% since the start of the covid policies in Q1 2020. This is illustrated in the figure below.



In essence, the policies of the Italian government have dilapidated 20% of the country’s resilience which, in Q4 of 2018 stood at 89.1%. The analysis has been performed by aggregating economic data of Italy’s 20 regions (for a total of 330 parameters):

  • gross domestic product at market prices
  • value added
  • taxes net of subsidies on products
  • gross domestic product at market prices
  • net imports
  • final internal consumption
  • final consumption expenditure on the economic territory of resident and non-resident households
  • final consumption expenditure of private social institutions at the service of families
  • final consumption expenditure of public administrations
  • gross fixed investments
  • inventory changes and acquisitions less disposals of valuables
  • gross domestic product at market prices
  • internal income from employment
  • gross operating surplus and gross mixed income
  •  net indirect taxes

The interesting thing is to investigate which regions of Italy are mostly responsible for this debacle. Let’s look at the current quarter, Q1 2022, and at Q2 2021.



With respect to Q1 2021, Lombardia has increased its resilience footprint, from 25% to 26%. The same may be said of Emilia Romagna as well as Lazio and Toscana. These four regions are the ones that have impacted negatively the resilience of Italy over the last year. It is interesting to note how the GDP of Lombardia is 22% of that of Italy but its impact on resilience is 26%.

The bottom line is clear. If you wish to control something (increase it or reduce it) it is necessary to measure it and to monitor it. If you want to lose weight, a diet is not enough – you must also measure your weight on a regular basis and adjust the diet accordingly. Thinking about weight loss will not accomplish weight loss. Hope is not a strategy. Throwing billions of Euros at something won’t automatically fix things. In many cases it is necessary, but in very many it is not sufficient.

So, the numbers seem to suggest that the goal of the “recovery” is not to increase resilience at all. The goal is move huge amounts of money and to increase debt. This will lead to greater fragility which will accomplish one important thing: in a fragile and crippled economy it will be easier to impose harsh austerity measures and to exercise greater levels of control over societies.