There’s a Dark Side to the Boom in Milan


When I recently visited a family friend in the UK, I was told that their twenty-year-old was leaving London for a new job in Milan. Apart from Britain’s exit from the recession and a promotion, the interest was the brain drain policy that allowed him to avoid up to 70% of his income in tax, his delighted father explained.

He is not alone. The tax regime was implemented in Italy in 2015 and became more generous in 2019, which is behind the arrival of foreigners to Italy, not only Italians who have lived abroad during the euro era or longer. According to a recent Bloomberg report, Goldman Sachs Group Inc. has begun moving its euro swaps trading desk to Milan. Post-Brexit regulatory pressure to move bankers out of London has had an impact. But in Italy, paying low taxes is considered to be a big incentive. Likewise, Milan’s geographic location; A favorite urban phrase is a two-hour drive to the beach, the mountains, or art-filled cities like Florence or Venice.

On a recent stroll along tree-lined boulevards in the lovely Conciliazione area, such as Via Vincenzo Monti, realtors told me that the arrival of “London money” has doubled the rents on spacious apartments in nearby Liberty-style palazzi. ten years ago.

It’s part of a larger trend in which Italy’s financial, fashion and business capital, Milan, is moving away from the rest of the country. Between 2014 and 2019, the local economy doubled that of Italy, and Expo 2015 launched a boom in the construction industry. This expansion has been accelerating since the Great Depression. Milan’s economy grew by 2.2 percent again last year, recovering from Covid-related losses by the end of 2021. Research center Prometeia predicts 4.8 percent growth in 2023. By contrast, Italy’s gross domestic product is expected to grow by just 0.4% this year, according to the national statistics office.

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You’ll feel that change when you get off the train at Milano Centrale, where you can feel the buzz and the energy. It’s a stark contrast to leave Roma Termini and enter the beautiful yet dull and decaying capital of Italy. It’s even more amazing how Milan has changed in the 21 years since I moved here. It has transformed from a sparsely built provincial town to a highly concentrated international hub.

That’s how good it is for a country so heavily indebted and in recession.

However, this did not come without a cost. The gap between the rich and the poor is widening and the number of people living in extreme poverty is increasing, said the research center SDG Watch Europe. As Goldman Sachs’ euro exchange team embarks on a new life in Milan, the story of school janitor Giuseppina Giuliano is burning across social media and the front pages of countless newspapers. Apparently, the young woman commutes almost 10 hours from her home in Naples to Milan every day, because it is too expensive to get a place in the business capital.

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The influx of new money affecting real estate prices is old news in cities from San Francisco to London. But Milan is really the only place in Italy that is creating significant jobs, and even then, the wages are lower than anywhere else in Europe. Andrea Alemanno of Ipsos told me recently: “There is a dearth of opportunities anywhere in Italy now, even for the wealthy and well-connected.” There’s a reason why Italians are the largest expat group in London.

Today, youth unemployment in Italy is 30% and overall unemployment is almost 8%. Mayor Beppe Sala has acknowledged that Milan’s desire to bring more students to its universities is increasingly hampered by the city’s high cost of living. The social divide can be seen at the Pane Quotidiano food bank, where more than 4,000 people queued on a recent Saturday morning, double what I reported during the Eurozone crisis. Volunteer coordinator Claudio Falavigna said half of the day’s crowd was middle-aged or older Italians. On a cold winter day, they were joined by young Africans and about 300 Ukrainian women and children.

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What is not consistent is Milan’s air quality. Milan has the most polluted air in Europe, worse than London or Paris. Last year, air pollution standards of the European Union were violated for 91 days. Diesel emissions are a big problem for more than half of the tens of thousands of people who commute to work in Milan every day, said Anna Germanotta, president of the Cittadini per l’Aria lobby group. Their numbers are on the rise as public transport use has fallen by a quarter since the pandemic. Due to the cost of real estate and the difficulty of finding work, they are driving from far away.

Tensions such as growth, inequality and the climate crisis pose challenges for many developed city mayors. But in Milan, they take more urgent measures. As Italy declines, Milan’s role as Italy’s engine becomes more important. It should be made suitable for living and working.

More from Bloomberg Opinion:

• The rich live in a separate economic world: Andrea Felsted

• How to Run Your Family Office Like Angelli: Rachel Sanderson

• Bankers and hedge funds will always love London: Marcus Ashworth

This column does not necessarily reflect the views of the editorial board or Bloomberg LP or its owners.

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