2009-11-05 18:20:19 - Recently published research from Business Monitor International, "Italy Defence & Security Report Q4 2009", is now available at Fast Market Research

Italy has traditionally been one of the biggest military spenders in the world. In 2007, it spent US$33.1bn, including civil defence, on military expenditure, according to the Stockholm International Peace Research Institute. But its defence budget has been slashed in recent years as the government has struggled with a widening budget deficit and recession. A pared down budget in recent

years has led many companies in the defence industry to turn their focus to exports. Multinational involvement within the sector is significant, traditionally taking the form of partnerships with other European defence companies. Italy plans to spend EUR14.3bn on defence in 2009 (exclusive of spending on the Carabinieri), down nearly 7 % from 2008. The country's draft budget calls for spending on maintenance and operations to be cut by nearly a third. Training will see a 45% cut in funds, while procurement spending will fall almost 21%. Industry experts foresee further cuts to defence spending as the government is forced to rein in the purse strings. In a sign of its financial condition, Italy is one of four European partners that want to cut back orders for the Eurofighter combat plane.

Italy, Germany, the UK and Spain want to lower their orders in a bid to save money. Meanwhile, Italy's largest defence firm, Finmeccanica, issued a dour sales outlook in March 2009. The company expects sales to rise to EUR17.7bn in 2009 and EUR18.6bn in 2010, Both forecasts fell short of what analysts had been expecting. The company sees new orders rising to EUR20.8bn in 2009. Like a number of other European economies, Italy has entered a recession. Compared to its neighbours though, the situation in Italy is particularly bleak. The country has the highest level of public debt among members of the euro region, according to the Organization for Economic Cooperation and Development. Italy's economy is forecast to contract by 4.3 % in 2009. Meanwhile, the jobless rate is expected to top 9.2 %, according to the organisation. The government of Silvio Berlusconi has pledged EUR40bn (US$100.2bn) to help jump-start the economy, although the total value of the package could come to EUR80bn when European Union funds are included. Nonetheless, economic unrest is growing. In April 2009, more than 200,000 people descended upon Rome to protest the government's economic policies.

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