(Bloomberg) -- In locked-down Milan, lives that always spilled joyously into the piazzas have moved almost entirely online, and texting has become the primary link to the outside world. It’s where silly coronavirus memes spread, like the one of Michelangelo’s Sistine Chapel fresco showing God giving Adam hand sanitizer. It’s the only way families can communicate with ailing loved ones sequestered in crowded hospital wards. And it’s how you learn of death’s relentless march: a neighbor, the grandfather of one of your kids’ schoolmates, a friend of a friend.

For almost a month, the 10 million people in Milan and the surrounding Lombardy region have been under forced quarantine, measures that have been extended nationwide and will likely continue for several more weeks. The place is deserted as anyone able to do so works from home with a laptop and AirPods, waiting for the 6 p.m. daily bulletin to glean any signs of hope in the mortality and infection statistics from the past 24 hours.

This is what’s become of the engine of the Italian economy, the heart of a region that accounts for almost half of the country’s output. Milan is Italy’s financial and business capital, a global fashion hub, a manufacturing powerhouse, encircled by rich agricultural land, a destination for millions of tourists every year. So, in a very real sense, the fate of Milan is the fate of Italy.

The last time Italy was truly on its knees, after World War II, it was Milan and nearby areas that lifted the country back to its feet. “Italians were at their best during the reconstruction, and they will do it again,” President Sergio Mattarella said in a prime-time speech.

The industries in the Milan-Turin-Genoa triangle fueled the “economic miracle” of the 1950s and ‘60s, when Italy grew more than 5% a year and its factories gave the world icons such as the Fiat 500, the Piaggio Vespa scooter, and the Pirelli tires used on both. “Milan won’t give up,” says Marco Tronchetti Provera, chief executive officer of Pirelli & C. SpA, whose son has tested positive for the virus. “Giving up isn’t part of its DNA.”

Yet it will take a mighty effort from Milan’s banks, factories, and farms to pull Italy out of this crisis. With business investment falling more than 10%, the economy is headed toward a 6% contraction this year, and the outlook could be even grimmer if the worst of the health emergency isn’t over by May, manufacturing lobby Confindustria predicts. The government is deploying at least 50 billion euros ($55 billion) in economic aid, which will add to borrowings already totaling 135% of GDP, more than twice the ratio of Germany.  That growing debt load threatens to leave Italy dependent on the European Union to maintain financial stability—and could put it at the mercy of its EU partners to keep investment flowing.

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“Italy came to the coronavirus pandemic in the worst possible shape, and the effects will be dramatic,” says Giuseppe Berta, a history professor at Bocconi University. “It’s a dangerous situation.” 

With so much at stake and so much effort being put into solutions, many Italians say the crisis, as painful as it is, presents an opportunity to enact long-overdue changes after a decade of stagnation. While there’s a risk that the country will become permanently hooked on emergency funding from the EU or the European Central Bank, some business leaders say the time is ripe for transforming the way Italians approach their lives and businesses.

“It’s difficult to estimate how severe the consequences will be for the country, but this could also become an opportunity to reform the system,” says Riccardo Mulone, country head for investment bank UBS Group AG in Italy. “This is a war, with doctors and nurses on the front line instead of soldiers, and in post-war periods Italians give their best.”

Any post-virus “reconstruction” will almost certainly flow along the axis linking Porta Nuova, a zone of steel-and-glass skyscrapers that’s the heart of a new financial district, and the Piazza Affari (“Business Square”) in the historic center, anchored by the heavy, neoclassical 1930s home of the Borsa Italiana stock exchange.

The banks clustered in those areas will funnel billions in government assistance to firms and families. In March, lenders agreed to a moratorium on repayments of mortgages and other debts of small and medium-sized businesses, and the government said it will guarantee loans needed to keep those companies in operation. And banks have agreed to advance laid-off workers money the state has promised them but that won’t be released for several more weeks.

“It’s important for the banks to be here to support the economy,” says Jean Pierre Mustier, CEO of UniCredit SpA.

The virus crisis is unfolding just as Italy’s banks have finally gotten back on their feet after the 2008 financial crisis. But the lockdown has slowed banks just as it has every quotidian task, from getting deliveries of food to filling prescriptions at the pharmacy. Bank branches only allow customers in the door every second day, so people needing a bridge loan or extra financing will face delays if they can’t complete a request online. “I’m still waiting for an appointment,” says Maurizio Guidi, co-owner of EUSolar Srl, a builder of solar plants seeking to expand his company’s credit line to cover costs during the lockdown. “They’re overwhelmed with calls.”

The crisis has cleared out both poles of Milan’s banking world. Piazza Gae Aulenti, a vast expanse of concrete and stone flanked by Cesar Pelli’s glistening UniCredit Tower, is a ghost town as most people stay home. The handful who do show up are checked with a thermo-scanner for signs of fever. Two miles south at Intesa Sanpaolo SpA’s “Ca’ de Sass” (Stone House), a 19th-century landmark modeled after renaissance banks in Florence, the neighborhood is similarly abandoned. No bankers in their suits, no tourists taking selfies, no diners in the restaurants, where the counters are empty and the chairs sit upended on the tables.

Then the quiet is shattered by an ambulance, taking another victim to overburdened doctors clad head-to-toe in protective gear, or by police patrolling the streets with a megaphone atop their cars endlessly bleating the message: “Stay at home. Don’t go outside. Stay at home. Don’t go outside.”

Since Italy’s first coronavirus infection was identified in a nearby town just six weeks ago, some 8,000 people have died from Covid-19 in Lombardy—almost 60% of the country’s total fatalities. To deal with the surge in cases, Fatebenefratelli hospital, about 10 minutes by bike northeast of the Borsa (or five minutes by metro, but few want to take it these days), has converted its pediatric ward to accommodate coronavirus patients. Sacco hospital, on the northern periphery, has suspended autopsies for the duration so its staff can stay focused on the virus.

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Portello, a historic manufacturing area where Alfa Romeo once made its sporty sedans and two-seaters, is seeing the city’s most ambitious healthcare effort to deal with the virus. Two pavilions in the Fiera Milano exhibition center are being turned into a field hospital with 200 intensive care beds for infected patients.

The facility, built in an unprecedented 10 days and expected to start receiving patients next week, highlights the sense of civic solidarity that the pandemic has spawned. The 40 million-euro cost was covered by donations from the likes of former Premier Silvio Berlusconi and Leonardo Del Vecchio, chairman of eyeglass giantEssilorLuxottica SA. TV celebrity-chef Carlo Cracco has been preparing specialties such as risotto and frittatas for the 70 workers building the hospital. Luca Rovati, the son of billionaire pharmaceutical pioneer Luigi Rovati, secured 260 ventilators from China for the facility.

“The city has united to do the impossible,” says Enrico Pazzali, chairman of Fondazione Fiera Milano, the operator of the exhibition center. “Everyone has been engaged in making this happen. They want to be part of something in this moment of tragedy.”

Milan’s factories, of course, will be central to any recovery, and despite the scale of the problems Italy faces, at least a few key companies report an almost business-as-usual posture. Prysmian SpA, the world’s largest manufacturer of electric and communications cables, was spun off from Pirelli in 2005 and is headquartered adjacent to the tire maker in the northern suburb of Bicocca. 

Valerio Battista, the Tuscan engineer who leads Prysmian, has been working from home but presides over regular video and phone meetings with managers worldwide. He says the impact so far is “under control” and as the crisis has eased in Asia, the news from there is encouraging.

“Our businesses in China are now working at full speed, and even better than we forecast following the end of the virus crisis,” Battista says. “I expect Italy, and Europe, to follow the same path in a few months, though probably with a slower pace of recovery.”

Automaker Ferrari, based two hours south of Milan (or maybe one hour in one of the company’s $1 million supercars), says its business has barely been dented by the outbreak as its cars are ordered as much as 18 months in advance. But with the factory closed during the lockdown, the company says it’s unclear whether it will see delays in deliveries later in the year.

“We haven’t seen any abnormal reduction of our order book,” says Ferrari CEO Louis Camilleri. “Our customers outside Italy are really stepping up to try to help us.”

For companies lacking a global footprint, by contrast, there’s little reason for optimism.

Salmoiraghi Automatic Handling makes equipment for automated warehouses at its site near the Monza Formula One race track just north of Milan’s A-51 ring road. Founder Sandro Salmoiraghi says the lockdown has thrown the company into “complete chaos,” and that a key customer recently delayed its order by a year, leaving his 60 employees with little to do.

“I remember the air raids of World War II in Milan,” says Salmoiraghi, 85. “Our current enemy, the virus, is worse than bombs because it’s invisible.”

If big businesses will provide the backbone of any recovery for Milan as it crawls out from the lockdown, it’s the small ones that serve as the city’s soul—and sustenance. So far, their fortunes are mixed, with a few standouts that are thriving. Terroir, an organic grocery and wine shop in the shabby-chic Risorgimento district, has seen sales double in recent weeks as homebound workers order from the corner shop rather than queue at a supermarket. But Smartkook, a normally busy lunch spot just a few minutes’ walk from Milan’s majestic gothic Duomo, had to dump dozens of salmon fillets it had bought just before the lockdown. “We tossed thousands of euros worth of food,” says manager Paolo Zubani, who’s now considering a carryout business to keep some revenue rolling in.

Any real recovery will have to wait until Smartkook and other restaurants can again open their tables to diners, both locals and visitors. Confcommercio, a business lobbying group, predicts that restaurants and hotels will see sales fall by 23 billion euros—22%—this year. Alberto Salvagnin suspects the decline for his company will be closer to 90%.

He’s the owner of Veditalia, a provider of English-language guided tours that last year had revenue of 1.2 million euros. He pulled in about 150,000 euros in January, but says “the rest of year will be zero.” All his reservations through September have been cancelled, and he predicts it will take years to get back to pre-corona levels. He has applied for government assistance to cover the salaries of his six employees, but the 1,200 euros they’ll receive each month is far less than they normally earn, and the program is currently set to expire in 90 days.

“How can I pay them after that?” Salvagnin asks. “The world will be poorer and people will be afraid to travel.”

Another business fueled by the tourist economy, fashion, is stepping up to contribute to the cause. Armani Group has started making disposable gowns for health workers at Italian factories where it typically sews $2,500 wool-and-cashmere suits. Prada is producing protective masks. Luxury parka maker Moncler SpA donated 10 million euros to the new field hospital at Portello.

With Via Monte Napoleone, the fashion district artery lined with sumptuous boutiques that are shuttered for the duration, Moncler is using the forced pause to ensure it can emerge stronger from the lockdown. The crisis highlights the importance of the internet for sales and promotions, CEO Remo Ruffini says, and as Moncler turns its attention to its winter collection, he’s instructing his staff to keep things simple so they can quickly get up to speed once things reopen.

“The message I’m giving my team is go back to basics,” he says. “Forget the frills.”

Milan lacks some of the allure of other Italian cities—Rome’s ancient ruins, the renaissance splendor of Florence, the canals of Venice—but what it’s missing in charm, it makes up for in charisma. At its core, Milan is to the 20th and early 21st centuries what each of those others was to an earlier era. It embraces business, commerce, and a vision of the future in a way that nowhere else in the country can match, and that, says Donatella Depperu, a professor of business strategy at Milan's Universita Cattolica del Sacro Cuore, is what will prove to be its salvation—and Italy’s.

“This pandemic won’t change Milan’s role as the moral and economic capital of the country,” she says. “And as such, the antibodies present in Milan will make it, and all of Italy, stronger as we move into the recovery.”


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