Bank of Italy: One in three Italian firms loss-making

One in three Italian firms loss-making, Bank of Italy says (ANSA) - Rome, November 6 - The euro crisis is taking an increasingly heavy toll on Italy's firms, with one in three expected to be in the red by the end of the year, up by nearly 24% on 2011, a report Tuesday by the Bank of Italy said. According to the annual survey of the country's industry and services sectors by the Italian central bank, loss-making firms are also cutting employment. Demand for bank credit is also drying up, the survey found, a sign that activity is slowing further. The survey comes one day after national statistics agency Istat forecast that Italy's economy would contract by 2.3% in 2012 and by a further 0.5% in 2013. Around 50% of firms expect to close the year in the black, according to the survey, which also found that the highest margin of loss-making firms are in the services sector, including hotels and restaurants. Half of firms also reported stationary employment situations, compared to about one third which said that they had cut back on their employee rosters. Total unemployment for 2012 is expected to increase by 0.4% and is seen as especially pronounced in companies employing between 20 and 49 workers. Also on the rise this year, according to the survey, is the number of firms which have needed to shift workers onto special state-backed furlough programs, called 'cassa integrazione guadagni' (CIG). Compared with 2011, the number of industrial firms resorting to CIG increased to 30% from 22% last year. Revenue figures are another clear signal that the Italian economy is sputtering. According to the survey, more than half of Italian companies saw sales decline in the first nine months of 2012, while only 24% saw turnover rise. Italy's ability to compete in international markets is stagnating and firms are increasingly calling for market-friendly reforms. According to the survey, some 70% of Italian companies want a reduction in high labor costs and company tax levels, among the highest in the developed economies. Commenting on the survey's findings on employment, Serena Sorrentino, national secretary of the Cgil labor union confederation, said: "With occupational levels which continue to decrease we expect some signs of life from the industry minister and a change in direction in favor of sustaining occupation and investments".