The Italian economy is still a bafflement, even in the 21st century. Italy-watchers see generous state welfare and pension payments and low council taxes. Tax avoidance is said to be almost a national sport and Italians are notoriously slow at paying their official dues.

Even the folk of Rome call themselves lazy and there does appear to be a casual attitude to work – some businesses just close down for a week or a fortnight in the summer, and restaurants in Rome have been known to put up the shutters for the whole of August, Europe’s traditional holiday month.

Yet the nation appears to thrive, certainly north of Naples. Shops, bars, restaurants and factories everywhere are busy.

The answer to the Italian economic mystery that you are usually offered is that the industrial north is beavering away to earn big money, while throughout the country the tourists are pouring in with pockets full of money. This is the nearest you will get to an explanation for the prosperity, and it is probably right.

Italy, of course, is a nation of contrasts. For example, the doubters said Rome would never be ready for the 1960 Olympic Games because the building work was so far behind schedule.

At the 59th minute of the eleventh hour the stops were pulled out and a mind-bending flurry of activity produced a beautiful Olympic city and stadium.

In April this year the population of Rome at least doubled for the funeral of Pope John Paul II and again the world was anxious, but the Italians achieved a brilliant feat of organisation and the funeral was conducted with the minimum of hitches. The roads were congested but the drains were not. None of the four million visitors starved and nobody died of cold for lack of shelter.

Italy remains the fourth largest economy in Europe and the sixth largest in the world. The prosperity has all happened in the 60 years since the end of the Second World War, during which time Italy has switched the emphasis of its economy from farming to industry.

In the early 1990s another change began. A privatisation programme was introduced and the state-owned enterprises and banks were sold off. This seems to have played a part in cutting the budget deficit from 11.1% of gross domestic product in 1990 to 1.5% in 2000.

Industrial production, however, has recently fallen, though only marginally. The July figure was 0.2% lower than in June and 2.1% below the July 2004 figure.

The working population has fallen and gross domestic product growth is slower than in other European countries. The Government has decided the economy therefore needs a boost and has promised tax cuts next year.

Nevertheless, industry reported orders in July were 2.2% higher than in June. Exports clearly keep Italy afloat – the industrial north manufactures the cars, the clothes and the machinery for sale around the world.

Then there is tourism, which is the third biggest earner of foreign income after machinery and textiles. Precise figures are difficult to come by, but for starters Florence alone welcomes seven million tourists a year.

More than half the Italian population is involved in some way in tourism and its associated activities, including transport and administration. The tourism trade in Italy has been hit by fears of terrorism and the European economic depression, just as in every other country, but these factors were probably offset in 2005 by the publicity surrounding the Pope’s death.

Some of these economic factors have had their effect on the drycleaning and laundry sectors, but not in the way expected in every case.

There is no doubt that the Italian drycleaning industry has suffered in the past 15 years. The country had 40,000 drycleaning shops in 1990. Today the number is 20,000 or fewer.

The main economic reason is that larger companies have entered the market with their economies of scale, and many small shops are unable to compete.

Some small shop owners have closed rather than cutting prices further and going bankrupt. The pressure has been greater on shops in the middle of towns and cities where parking is a problem.

Customers are reluctant to travel to them just to drop in a suit. They prefer to combine a visit to a larger company’s shop in a shopping mall with their regular trip to the supermarket in the same centre.

Another factor is the general feeling among Italians that money is getting tighter. Families are blaming the switch to the Euro and a general economic depression, real or imaginary, and as a result they take their clothes to the drycleaner less often.

The booming fashion industry has had a somewhat unexpected effect. The trend is towards the informal look, which means that more clothes are washable.

Finally, in many the mamma and pappa type shops, the owners’ sons and daughters are less willing to take over. They prefer to go into employment or the professions – and, what is more, their parents encourage them to become qualified and go to work in other sectors.

Drycleaners disappear

The contraction of the small business part of the market is bad news for many of the manufacturers of drycleaning equipment. Machines in the shops would probably have to be replaced or upgraded to meet new regulations in 2007, but this trade is shrinking as the shops disappear.

“It has become a tough market,” says Alessandro Trippa, export manager of the manufacturer Maestrelli. Already his company is concentrating on sales abroad and is doing only about 5% of its business in Italy.

Some regret is felt by Alberto Tromponi, export manager at Realstar. He finds that the big chains do not give the same amount of business. The fashion industry, however, is bringing Realstar some benefits.

While more clothes are washable, Realstar machines now treat the clothes before leaving the factories.

Eugenio Boni, commercial manager of the manufacturer Italclean, says his company prefers to do business outside Italy – less than 5% of its production is in the country.

“It’s not a reliable market,” he says. “People change their brand every few years.” He also likes customers abroad because they pay on ordering . “It’s a rare occurrence in Italy,” says Boni.

Yet the drycleaning sector is good to some companies. “The market is growing,” says Gabriele Cuppini, sales director at Union. This manufacturer regards the switch from small shops to medium-sized and large companies as good for professional suppliers.

Business is looking up after several years of decline for Trevil, the Italian manufacturer of finishing equipment. This may be because finishing equipment is less expensive to buy or replace than the drycleaning machines. Pony, another maker of finishing equipment, has seen an improvement of 2 to 3% in sales this year, a small increase but a move in the right direction.

Even if the drycleaning market is sagging, the demand for laundry equipment is on the rise. Jesper Jensen, chief executive of the Danish company, Jensen, in the textile rental equipment area, calls Italy “a very important market”. Jensen observes: “It’s a highly fragmented market but there are still a lot of laundries.”

One reason for the growth is the expanding demand for uniform rental.

“They will need more and more automation,” says Jensen, “and that’s good for business.”

Italy is a growing market for Primus,laundry equipment maker with headquarters in Belgium. One reason is literally the fashion tendency towards casual clothes that go into a wet wash. Laundries are collecting some of the business lost by the drycleaners.

Another reason has social and economic roots. The prices of property and renting mean more people are living in smaller flats and houses.

With space at a premium the occupants cannot fit in a washing machine. At the same time, more people are living alone in Italy and therefore do not own a machine. The result is the rise of the coin-operated laundry shop.

Ten years ago they were virtually non-existent in Italy. Today there are 250 to 300 of these businesses, mainly in the larger towns and cities.

A third reason for Primus to celebrate is the rising demand for hygienic washing machines in hospitals and care homes as anti-contamination regulations become much stricter.

Italy is also a good market for the German textile rental company Herbert Kannegiesser. Horst Loeffler, managing director of the company’s Italian operation, explains: “Hospitals need machines with less consumption of energy and detergent.” And machines with economy in mind are Kannegiesser’s speciality.

In the next few years more small drycleaners will close, believes Tromponi at Realstar. The ideal number, according to Cuppini at Union, will be 14,000, though this is still well ahead of the 5,000 in the UK.

The general feeling is that many will just close, while a few will continue to be bought out or replaced by larger companies.

An interesting response from small drycleaners has been noted by Corinna Mapelli, Trevil’s marketing manager. The company’s dealers are now starting to help shops to draw up business plans to survive, and in some cases the answer is to specialise.

The result is that occasionally shops will go for the top end of the market, drycleaning expensive fashion items for the more well-heeled customer.

This is unlikely, however, to halt the swing to laundry cleaning in Italy, which is about to receive another boost from changing circumstances, this time in the tourism trade.

Italy is going big on agritourism, in which the holidays are in agricultural or countryside locations. The places to stay are usually comfortable hotels in rural settings, offering country walks, pony trekking and the like. And they will all need laundry services.