Nov 20, 2012
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European luxury goods makers want Italy's Monti to stay

Nov 20, 2012

ROME - European luxury group executives see the return of Prime Minister Mario Monti at the helm of a new Italian government as the best way to pull the country back from recession, even though his austerity measures have hit their wealthy customers.

Monti, who has headed a non-elected government of technocrats for the past year, has said he prefers to return to academia. But business leaders and some politicians have been prodding him to stay.

Mario Monti (photo: AFP)

Italy will hold national elections, most likely in April, and while Monti is not a candidate for either political bloc, some feel he is the only person able to keep guiding the country through troubled economic waters.

More surprisingly, support for Monti came on Friday from a luxury world whose affluent consumers have also been targeted by sweeping fiscal measures needed to reduce the country's debt.

"Italy badly needs stability," Francesco Trapani, chief executive of jewellery and watches division at French group LVMH told reporters on Friday.

"If the Monti government goes ahead for a few years it would be good news for us," Trapani said on the sidelines of the International Herald Tribune luxury summit.

Sales of designer clothes in Italy are declining despite steady flows of wealthy tourists from Asia.

Consultancy Bain & Co forecasts global luxury sales growth to slow to 10 percent this year at current exchange rates from 11 percent in 2011. Sales of fashion in Italy are down.

"The situation is far from being clear and the evolution of the political situation will be key," Trapani, wearing a classic dark suit and a yellow tie, told Reuters.

"There is nothing worse in a country that needs to be managed than not to have a clear picture".


Diego Della Valle, chairman and chief executive of Italian luxury shoemaker Tod's, praised Monti for his efforts so far.

"If the things that the government is doing bring results, the mood will change. People will lose pessimism," he said.

In September, Monti said he would be willing, out of a sense of responsibility, to lead a new government if the election did not produce a leader with a clear majority.

The luxury executives said Italy needs a continuation of credible leadership after years of mismanagement and corruption.

In September, Della Valle spent nearly 100,000 euros on a three-page advertisement in Italy's two largest newspapers to call for change and slam what many have called the political caste.

Former Prime Minister Silvio Berlusconi, who has been the subject of several trials for alleged corruption and for allegedly paying for sex with a minor, has said he would not run for prime minister but instead help his centre-right bloc.

Renzo Rosso, founder of the Diesel brand, said the need for change was evidenced by the street protests this week in Europe, but he condemned the violence that erupted.

"A change is needed. I think that Monti is doing well but he is paying for 30 years of bad politics and corruption," Rossi said.

"He must do something but I don't know if he will be able to fight against corruption and the system. If he does, I fear they will send him back home," he said.

The prolonged recession is weighing on Monti's approval rating, which has halved to 36 percent compared with 71 percent when he took over 12 months ago, according to an SWG poll.

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