Giorgia Meloni hit by business backlash over botched support scheme

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Giorgia Meloni’s government is facing mounting anger from Italian businesses, after the botched handling of its flagship business support scheme has left many companies out of pocket.

Italy’s influential industrial association Confindustria and other groups have abandoned their usual reticence and accused the government of reneging on promises, after Rome slashed the scheme’s final tranche of funding from €1.3bn to €535mn, citing the economic fallout from the war in Iran.

The eruption is the culmination of months of frustration over the troubled programme, named Transition 5.0. It was originally funded with €6.3bn from the European Commission and designed to spur investment in digitisation and green technology but was plagued by changes and cuts.

Confindustria vice-president Marco Nocivelli called the government’s latest decision — taken at a Cabinet meeting on Friday — a “strategic error” that would undermine business confidence and could prompt companies to relocate their manufacturing capacity abroad.

“We fully understand that there is a war and that we must stay inside the limit of the budget,” Nocivelli said. “But we are talking about people that have already put their money on the table, and then they say, ‘no, we have changed our mind.’”

The revolt adds to the pressure on Meloni, who suffered an embarrassing setback with losing a referendum on her proposed overhaul of the country’s judiciary last month. She now faces the challenge of steering Italy through the geopolitical and economic turmoil triggered by the US-Israel war on Iran, ahead of next year’s general elections.

Many industry groups have been quietly grumbling about the Meloni government’s lack of a plan to revive faltering growth, which slowed to just 0.5 per cent in 2025, one of the slowest paces in Europe. Others complain of chaotic policymaking, such as an attempt, eventually scrapped, to impose a controversial tax on dividends paid to corporate entities.

But the government’s decision to cut funds promised to companies in November — which followed an earlier reduction to the scheme — has sparked an angry outpouring. Industry groups complain that the move unfairly affects those who rushed to make investments based on the promise of receiving the tax credits.

Business community leaders are due to meet with industry minister Adolfo Urso on Wednesday to try to find a resolution.

Meloni’s government has been hunting for savings after the national statistics agency in March released preliminary estimates showing Italy’s 2025 fiscal deficit slightly overshot the target, coming in at 3.1 per cent of GDP.

The government is determined to have the 2025 deficit affirmed at 3 per cent of GDP so that Italy can exit the EU’s excess deficit procedure, giving it more fiscal flexibility.

Finance minister Giancarlo Giorgetti told entrepreneurs last weekend that the economic fallout of the Middle East conflict is forcing Rome to make tough choices on utilising its scarce resources.

“We had a certain programme trajectory, and then what happened happened: something beyond our control — an external shock,” he said, noting that Rome had to re-evaluate “what we need to do, what we need to help, what we need to incentivise in the near future, taking into account the budget constraints that always exist.”

Even before the current outcry, the Transition 5.0 scheme — which offered tax credits of up to 45 per cent for eligible investments — caused simmering tensions between industries and Meloni’s government due to its convoluted design, frequent changes and funding cuts.

In September, Italy slashed the scheme’s original €6.3bn to just €2.5bn and reallocated the rest, citing sluggish take-up, though businesses complained that this was due to the confusing application process, rather than a lack of interest.

In November. Rome declared the €2.5bn EU funding for the schemes was exhausted, triggering business ire — and prompting Giorgetti to pledge to use Rome’s own resources to pay for companies that sought the credits by November 27, an amount now estimated at €1.3bn.

The Italian Confederation of Small and Medium Private Enterprises (Confapi), accused the government of “betraying the trust” of entrepreneurs. The president, Cristian Camisa, said it was “draining the lifeblood of those who are ensuring the country’s economic stability through innovation”.