MILAN — Italy’s fashion and luxury entrepreneurs on Thursday expressed their disapproval, concerns and disappointment following the resignation of Prime Minister Mario Draghi after his political partners withdrew their support.
“Thanks to Mario Draghi, Italy acquired great international credibility and started to have a key role in Europe and in the world,” said Renzo Rosso, founder of OTB. “We have relinquished one of the major global economic leaders, the only person who could have led the country out of the crisis, manage the PNNR [National Recovery and Resilience Plan] funds, support the industries and rebalance the energy problem.”
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The news impacted morale in a country grappling with rising costs, inflation and a resurgence of the COVID-19 pandemic. President Sergio Mattarella on Thursday afternoon said that “the moment we are going through does not allow for any delays,” and set the date of general elections, the outcome of which appears to be very uncertain. They will be held on Sept. 25, which is at the tail end of Milan Fashion Week.
The political uncertainty dragged down Italy’s bonds and stocks. The country’s main index, the FTSE MIB, fell 2.07 percent to 20,905 by mid-morning following the news, recovering by the end of trading and closing down 0.71 percent to 21,196.
The BTP-Bund spread rose 6.34 percent to 229 basis points, closing up 6.04 percent to 229 basis points.
While shares in major banks such as Unicredit, Italy’s state postal service and Telecom Italia all saw their shares fall during the day, luxury brands weathered the storm, with Brunello Cucinelli shares closing up 1.36 at 52.15 euros; Salvatore Ferragamo rising 2.04 percent at 16.49 euros; Tod’s gaining 2.18 percent at 32.76 euros, and Moncler edging up 1.01 percent at 43.19 euros.
Italy’s coalition fell apart on Wednesday when three of Draghi’s main political party allies snubbed a confidence vote in the Senate to try and renew the alliance. Although Draghi won the vote, the left-leaning Five Star Movement, the Lega and Forza Italia parties said they wouldn’t take part, causing the government to collapse.
Rosso, whose group includes brands ranging from Jil Sander, Diesel and Marni to Maison Margiela and Viktor & Rolf, said that “as an entrepreneur I am very worried about this situation and the irresponsibility of our political class and my position is shared by many colleagues that represent main Italian companies. Italy is a country of excellence, of strong entrepreneurial skills, unrivaled know-how in many industries, which has been transformed in the ‘Made in Italy’ brand; this is one of the reasons why the country has succeeded in resisting decades of political instability. Mario Draghi was the opportunity to be represented by a great man and to bring the values of our country in the world, a unique opportunity that will never happen again.”
Remo Ruffini, chairman and chief executive officer of Moncler, lamented that “it is very sad that we have missed the opportunity to let the most internationally respected Italian guide us through one of the most challenging periods of our history. Draghi’s mandate was interrupted in the midst of an outstanding job in the interest of the country. Now we have in front of us an unfinished agenda of urgent reforms and deadlines intended to take Italy to a new future.” Ruffini said the he was “grateful to Professor Draghi for remaining faithful to his ‘whatever it takes’” and expressed disappointment his mission was stopped merely for political gain. “Common sense is not that common,” he said, referring to the squabbling parties that undermined the government’s continuity.
Brunello Cucinelli has spoken highly and supported Draghi all throughout his tenure, and was “saddened” to see him leave office, but he admitted he was “not worried,” given his personal take on the situation.
“In my 67 years, I’ve seen 64 governments rule Italy, and while this could generate insecurity and disorient citizens and global observes, I see things in a different way, as Italy has a political system that represents the utmost expression of democracy inherited by ancient Greece and is not a sign of weakness,” said Cucinelli.
He believes that Italy’s president is a guarantor of stability while in several other countries, such as France, just as an example, the president is also head of the government, in power for five years and no changes can be made even if their political decisions do not meet expectations. “Some temporary custodians are more enlightened and some less, but I love our political system,” he remarked.
Cucinelli said Italy is “very credible” and touted its manufacturing prowess, as it continues to be “one of the first economic powers in the world, strong in its creativity, culture and human values.”
Asked about potential concerns over the performance of the stock market, he waved away the challenges that can be merely felt “for one or two days.”
Entrepreneur and founder of the Yoox Net-a-porter Group Federico Marchetti said: “I have always tried to keep the Italian flag high up in the world with my entrepreneurial activity and I was proud after so many years to have a Government with a capital G: Serious, ethical, competent and influential. Toppling the Government of Professor Draghi in such a shameful way has inflicted a serious damage to Italy both in terms of economic and social image.”
Stefano Beraldo, CEO of one of Italy’s biggest retailers, OVS, with sales last year of 1.36 billion euros, said Draghi’s resignation “has many implications. The first is the negative impact on the Italian creditworthiness, that improved in the last 18 months thanks to the credibility of the prime minister at the European and international level. Creditworthiness is hard won, and easily lost.”
The other implication, continued Beraldo, “is the epilogue of a sick political framework. The next polls will tell whether the Italians will put the country in the hands of demagogic populism or will choose those political forces committed to continue along the path that has been set out in order not to lose the opportunity to benefit from the resources made available by the EU Next Generation plan.”
Beraldo added that “what happened could perhaps have been avoided if the Five Star Movement and its leader [Giuseppe] Conte had realized how impossible it is for them to recover the reasons for their electoral success in 2018, if Forza Italia did not have suddenly lost its traditional inclination to support the government, and if the Lega had not taken advantage of all this to regain political weight. But also, if President Draghi himself, faced with the appeals coming from civil society, so often called upon but so little listened to, had resisted the understandable urge to tell everyone to go to hell, including the country.” That said, he urged everyone to avoid thinking that “Italy will fall into the ravine. We have enormous resources and if we know how to emerge from the polls with a credible government, we will recover quickly.”
Mattarella has reportedly asked Draghi to remain in place in the interim with a caretaker government.
Last week, Mattarella rejected Draghi’s resignation, convincing him to hold off for a few days and buying time in the hope that the political squabbles could be settled through a compromise. At the time, Draghi clearly said he had no intention of staying on if he did not have the full support of his partners.
Draghi, the former European Central Bank president, has brought political stability to Italy, the third largest economy in the eurozone, since his appointment in February 2021.
His international status and prestige helped him receive steadfast support from the fashion industry, as reported, and over the weekend, industrialists, union leaders, mayors and citizens signed open letters and petitions asking Draghi to remain in office. Italy also needs a solid government that can pass the reforms that are part of the 200 billion euro aid package it received from the European Union.
On Monday, luxury goods association Altagamma and Camera Nazionale della Moda Italiana issued a joint statement to “firmly express the need to give continuity” to the government headed by Draghi, “believing that all political parties, for the benefit of the country” should stand behind him. “This is what the country wants and it can’t be ignored.”
Confindustria Moda also lamented the “serious irresponsibility” and “mere electoral calculations” of political parties that damage the recovery of the country.
Draghi has also played an important role within the context of Russia’s invasion of Ukraine and the EU sanctions that have affected Italian households, causing a rise in consumer prices.