Developments in the regions during the year
The cyclical slackening that began in the summer months affected all parts of the country, although conditions remain better in the Centre and North, in particular some regions of the North-East, above all as regards industrial turnover and exports. The contraction of bank lending to the productive economy eased in all parts of the country, while the tightening of credit terms has practically ceased throughout Italy.
Regional divergences during the crisis (2007-2013)
The macroeconomic picture - The steep fall in exports in 2008-09 affected the North-West and the North-East most severely. In 2010-11, while the Centre and North recovered thanks to an upturn in exports, output in the South continued to decline. In 2012-13, two years of slumping domestic demand, output declined most markedly in the South, and in 2013 output in that part of the country was 13.5 per cent lower than in 2017, whereas in the Centre and North the decrease came to 7.1 per cent.
The industrial system and firms - Industrial value added diminished less in the North than in the rest of Italy between 2007 and 2013. The dispersion of firms' performance increased in the course of the crisis.
Employment and the labour market - The decline in employment has accentuated local labour market divergences. More than a third of the overall increase in heterogeneity is accounted for by the more pronounced employment contraction in the South. In 2012 the number of people moving from the South to the Centre and North began to rise, and the share of the well-educated among these migrants increased.
The economic and financial conditions of households - Between 2013 and 2017, the fall in the consumption of Southern households outpaced that in their disposable income. In the rest of Italy this pattern did not set in until 2012. The Southern regions continue to be characterized by a smaller proportion of indebted households and a lower ratio of debt to disposable income, but a greater degree of indebted household financial vulnerability.
Finance to firms - By comparison with those in the Centre and North, Southern firms depend more on bank credit and have traditionally faced stiffer terms for access to it. This divergence reflects differences in the sectoral and size distribution of firms as well as differing conditions in the business environment. During the crisis the increase in the number of credit-rationed firms was practically uniform throughout the country, but the interregional disparity in the cost of credit widened.
Government intervention - Every year the activity of government generates substantial financial flows to the South from the rest of Italy, principally producing income redistribution at the interpersonal level. Our estimates indicated that the net flow to the South (public spending in the area net of the tax revenue raised there) was larger in 2009 and 2010 than in the pre-crisis years and began to come back down in 2011. This pattern is due only in part to changes in the resources allocated to the South under policies for cohesion.
