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Analysis | There is a dark side to the Boom in Milan


On a recent trip to a family friend in the UK, I was told their 20-something would be leaving London for a new job in Milan. Aside from a promotion and an escape from Britain’s economic doldrums, the attraction was a policy designed to reverse a brain drain that allowed him to avoid tax on a whopping 70% of his income, his delighted father explained. from.

He’s not alone. The tax regime rolled out in Italy in 2015 and made more generous in 2019 is behind not only the return of Italians who have lived abroad throughout the euro era – or more – but also the arrival of foreigners to Italy. According to a recent Bloomberg News report, Goldman Sachs Group Inc. started moving part of its euro swap trading desk to Milan. Regulatory pressure to remove bankers from London post-Brexit has been a push factor. But paying less tax in Italy has been cited as a major draw. Likewise the geographical location of Milan; a favorite urban expression is that it takes two hours to get anywhere: coast, mountains, or art-laden cities like Florence or Venice.

On a recent stroll down Via Vincenzo Monti, a tree-lined boulevard in the upscale eastern central Conciliazione zone, realtors told me that the arrival of “London money” has helped double rents in spacious apartments in nearby Liberty -style palazzi compared to ten years ago.

It’s part of a larger trend of Milan, Italy’s financial, fashion and business capital, retreating from the rest of the country. From 2014 to 2019, the local economy grew twice as fast as Italy’s as Expo 2015 kicked off a construction boom. That expansion has accelerated since the pandemic. Milan’s economy had made up for its Covid-related losses by the end of 2021 and grew by a further 2.2% last year. It is expected to grow by 4.8% in 2023, according to Prometeia, a think tank. In contrast, Italy’s gross domestic product is expected to grow by just 0.4% this year, according to the national statistics agency Istat.

You can feel that change when you step off the train at Milano Centrale, where the buzz and energy are palpable. The contrast with leaving Roma Termini to the beautiful, but lazy and dilapidated Italian capital is stark. Even stronger is the move to Milan itself in the 21 years since I first came to live here. It has changed from a low-rise provincial town to an increasingly international high-rise hub.

So far, things are going well in a country mired in high debt and decline.

Still, it hasn’t come without a cost. The gap between rich and poor has widened and more people are living in extreme poverty, according to think tank SDG Watch Europe. Ironically, the story of school janitor Giuseppina Giuliano, while Goldman Sach’s Euro swap team is supposedly making a new life in Milan, has caught fire on social media and on the front pages of countless newspapers; apparently the young woman travels daily from her home in Naples to Milan – a journey of nearly 10 hours each way – because housing in the business capital is too expensive.

The influx of new money disrupting real estate prices is old news in cities from San Francisco to London. But Milan is really the only place in Italy that creates a lot of employment, and even then it’s muted and wages are lower than elsewhere in Europe. Andrea Alemanno of Ipsos recently told me: “There is now little opportunity anywhere in Italy, even for the wealthy and well-connected.” It is not for nothing that Italians are among the largest groups of foreigners in London.

Youth unemployment in Italy today stands at 30%, with the overall unemployment rate approaching 8%. Mayor Beppe Sala has admitted that Milan’s intention to attract more students to its universities has been increasingly hampered by the cost of a room in the city. The social rifts can also be seen at the Pane Quotidiano food bank, where more than 4,000 people lined up on a recent Saturday morning, more than double the number when I reported there during the Eurozone crisis. As many as half of them on any given day are middle-aged to older Italians, says Claudio Falavigna, a volunteer coordinator. On this wintry day they were joined by young people from Africa and about 300 Ukrainian women and children.

What is also not sustainable is the air quality in Milan. Milan has the dirtiest air in Europe, much worse than London or Paris. Last year it breached European Union air pollution standards for a shocking 91 days. More than half of the tens of thousands of people who arrive in Milan every day for work drive, making diesel fumes the big problem, says Anna Germanotta, president of lobby group Cittadini per l’Aria. Their numbers are increasing as public transport use has fallen by a quarter since the pandemic. Combined with the cost of real estate and the difficulty of finding work, they are driving from further afield.

The tensions of growth, inequality and climate crisis are challenging mayors in many developed cities. But in Milan they get an extra urgency. As Italy declines, Milan’s role as an engine for Italy becomes more important. It must be made suitable for living – and working.

More from Bloomberg’s opinion:

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

• How to Run a Family Office Like an Agnelli: Rachel Sanderson

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

This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

More stories like this are available at bloomberg.com/opinion

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