Not missing the opportunity

After over a decade of stagnation and recession, Italy finally has an opportunity to change gear and turn the wheel towards a period of sustainable growth. Most of Europe and the main western economies have by now recouped the GDP loss derived from the financial crisis of 2008-09. Real estate values, the initial ‘culprits’ of the crisis, are back or above their 2007 high water mark in many western capitals. Not so Italy, where real estate prices are still hovering at the bottom, 30-40% below previous highs. Both London and New York have seen foreigners among the largest buyers of premium real estate. It is likely that Italy will follow when foreign investors will see that Rome and Milan trade at an unusual discount to other western capitals—another form of ‘spread’. One reason for this is due to the low foreign direct investment of the last 5 years. The government should work hard to reverse this issue. The news of last week that an American company decided against investing in Italy because of its fear that its patents wouldn’t be protected in Italy due to the lengthy civil litigation processes are not a good sign. Renzi has a lot to do, but he should instruct his justice minister to look very seriously into a dramatic fix to Italy’s notoriously inefficient civil justice system. If foreign investors cannot trust Italy to protect their IP, they will vote with their feet and move elsewhere.