Italy's budgetary policy must continue to reallocate resources in favour of labour and firms, said Mario Draghi, the governor of the country's central bank.

Draghi said the Italian economy was grappling with a severe recession. He said giving support to industry remained a priority objective as a structural weakening of the productive system must be avoided. He said the exit from the market of a large number of firms would reduce the country's potential output and would also impose heavy costs