Confindustria's president, Emanuele Orsini, has issued a stark warning to European policymakers: the continent must forge a unified economic strategy or risk losing its industrial base to cheaper competitors abroad. Speaking at the Festival dell'Economia di Trento, Orsini emphasized that fragmented national policies are no longer sustainable in the face of soaring energy costs and escalating geopolitical crises that threaten the competitiveness of Italian and European manufacturers.
Why This Matters:
• Energy costs: Italian industrial electricity prices averaged 130.5 €/MWh in early 2026—nearly triple Spain's 42.5 €/MWh—eroding profit margins and driving businesses to consider relocation.
• Geopolitical shock: The Strait of Hormuz closure since early March has spiked Brent crude to 105 dollars/barrel and triggered 11% energy inflation across the EU, with no quick resolution in sight.
• Industrial exodus: Without a single European energy market, Italy risks losing factories and investment to neighbors with lower operating costs, accelerating deindustrialization.
The Energy Cost Crisis Squeezing Italian Industry
Italy's manufacturers are grappling with an energy price structure that puts them at a profound disadvantage. As of April 2026, wholesale electricity in Italy cost roughly 3 times more than in Spain, a disparity rooted in fundamentally different energy strategies. Italy still generates 44% of its electricity from natural gas, and gas pricing determined the wholesale electricity rate in 89% of trading hours during the first quarter of 2026. Spain, by contrast, has aggressively expanded renewables to reach a projected 55% share of its energy mix this year, reducing gas dependency to just 19% of generation and limiting gas-driven pricing to only 15% of hours.
This structural gap translates into real economic pain. Energy-intensive sectors—steel, chemicals, glass—face production costs at least 10% higher than their Spanish or American counterparts, making imports more attractive and domestic manufacturing less viable. System charges on Italian electricity bills run three times higher than those in Spain, compounding the cost burden. Orsini noted that Spain's lower energy expenses have fueled stronger GDP growth and enhanced its ability to attract foreign investment and retain domestic production, a stark contrast to Italy's struggle to remain competitive.
The situation worsened dramatically in late February 2026, when the Middle East conflict escalated with coordinated strikes against Iranian targets. The effective closure of the Strait of Hormuz—a chokepoint for 20% of global liquefied natural gas supply—has since kept energy markets in turmoil. Brent crude jumped 73% between January and mid-May, while spot LNG prices in Asia surged over 140%. European industrial buyers, already vulnerable to volatile fossil fuel markets, have seen input costs spiral beyond budgeted levels, squeezing margins and forcing some to curtail production. Orsini called for a swift resolution to the Hormuz standoff, warning that prolonged disruption could push crude toward 200 dollars/barrel and deepen the cost crisis for Italian factories.
A Call for European Unity and Real Industrial Policy
Orsini's central argument is that Europe can no longer afford policy fragmentation. He advocated for "real economic policies" that transcend national borders and directly support industry, rather than the ideologically driven frameworks he believes have dominated recent EU decision-making. Specifically, he criticized certain aspects of the Green Deal, such as the ban on new internal combustion engine vehicles from 2035, arguing these mandates ignore the practical cost burdens on businesses and workers. "We don't want to delocalize our industries and deindustrialize our continent," Orsini stated, emphasizing that regulatory overreach without adequate support mechanisms will drive capital and jobs overseas.
Confindustria has proposed a comprehensive "Great European Industrial Plan" designed to restore competitiveness through regulatory simplification, targeted investment, and a long-term strategic vision. The plan addresses friction points such as the EU Emissions Trading System (ETS), which saw quota prices rise sharply and contribute to higher electricity costs, and the Carbon Border Adjustment Mechanism (CBAM), which adds compliance complexity. Orsini has also suggested that Europe may need to "break the Stability Pact" and increase public borrowing to finance emergency support for businesses and households facing energy shocks—a controversial proposal that underscores the severity of the crisis as he sees it.
The Push for a Single European Energy Market
A recurring theme in Orsini's remarks is the urgent need for a unified European energy market. Currently, each member state operates semi-autonomous energy systems with different regulatory frameworks, fiscal burdens, and infrastructure priorities. This fragmentation prevents the continent from optimizing renewable generation across borders—routing cheap wind power from the North Sea to southern industrial hubs, for example, or balancing solar capacity between Mediterranean and Central European grids. Orsini argued that until Europe achieves a single energy price and seamless cross-border transmission, countries like Italy will remain at a structural disadvantage.
The European Commission has signaled its intent to accelerate progress. In March 2026, Commission President Ursula von der Leyen outlined a roadmap through 2028 that includes measures to harmonize professional qualifications, reduce bureaucratic barriers, and expand energy investment fivefold to nearly 30 billion euros in the 2028-2034 budget cycle. A forthcoming "Action Plan for Electrification" and a "Networks Package" aim to improve grid coordination and mitigate price volatility. However, key issues—such as the future structure of the ETS and the feasibility of joint Eurobonds to finance energy infrastructure—remain unresolved, and national governments have shown reluctance to cede sovereignty over energy policy.
Orsini singled out nuclear energy as another area where Europe must rethink its stance. Italy currently ranks 27th in the EU for energy costs, and Orsini cautioned that dismissing nuclear power out of hand limits the continent's options for stable, low-carbon baseload generation. He questioned the "myopia" of current European leadership and suggested that a change in governance may be necessary if decision-makers continue to overlook the tangible challenges facing manufacturers.
What This Means for Italian Businesses and Investors
For companies operating in Italy, the immediate outlook is challenging. Energy inflation above 11% through the second quarter of 2026 and elevated prices expected into 2027 will continue to squeeze operating margins. S&P Global Ratings has warned of rising default risk among highly leveraged firms with limited pricing power, particularly in petrochemicals and aviation. Every week the Strait of Hormuz remains closed could trigger a month of supply chain disruptions, delaying raw material deliveries and raising shipping costs.
Investors should monitor three key indicators: progress toward a single EU energy market, concrete measures to reduce Italy's gas dependency, and any relaxation of fiscal rules that would allow Rome to subsidize industrial energy costs. The Confindustria national assembly scheduled for Tuesday will likely produce specific policy demands that could influence government negotiations in Brussels. If Italy secures support for targeted energy subsidies or accelerated renewable buildout, the competitiveness gap with Spain may begin to narrow. Conversely, prolonged policy drift increases the risk that Italian manufacturers will relocate production to jurisdictions with lower and more predictable energy expenses.
Orsini's warnings reflect a broader anxiety across European industry: that the continent's ambitious climate goals, pursued without sufficient attention to cost competitiveness, could inadvertently hollow out its manufacturing base. The next 18 months will test whether European leaders can translate rhetoric about unity and industrial policy into tangible measures that keep factories running and workers employed in Italy and beyond.
