(By Kate Carlisle) Rome, June 5 - The credit crunch in Italy has created a "tragic" hole of 50 to 60 billion euros for the country's businesses over the last 18 months, the head of Italian industrialists' confederation Confindustria, Giorgio Squinzi, said on Wednesday. "This is a problem that has to be tackled, because once (businesses are) closed, there is no re-opening," he said commenting on a Confindustria report saying that an alarming 15% of Italian manufacturing capacity has been destroyed by the economic crisis. Around 55,000 manufacturing companies closed down in recession-ravaged Italy in the 2009-2012 period, Confindustria said. "Italy remains the (world's) seventh top industrial power, but its production base is at risk because of the depth and duration of the drop in demand," it said. The country's manufacturing is in peril, Confindustria warned, while stressing that helping the sector capitalise on its huge potential would contribute to emerging from the country's longest recession in over 20 years. The report said 539,000 Italian manufacturing jobs were lost between 2007 and 2012, adding that there is a danger that the current crisis could end up claiming more than the 724,000 jobs lost in the 1980-85 period. "The number of people employed in manufacturing has fallen by 10%," read a report by Confindustria's research centre. "Italian companies will probably be forced to cut more jobs in the coming months," Squinzi said. "But Italy has excellent cards to play... The lesson of the best advanced and emerging countries is that more manufacturing equals more growth". Confindustria's chief emphasized that "we are living in difficult times, but as long as we are united and convinced of our possibilities, I will continue to have the utmost faith that we are strong enough to confront and overcome this period". However, Squinzi warned that "when the recovery starts, Italy might not be able to take part because its motor has been broken". Banks cut 44 billion euros' worth of credit to Italian companies in 2012, according to a report by rating agency Standard & Poor's released on Wednesday. A comprehensive strategy that looks to the "long-term...must be launched immediately on several fronts, otherwise what we take with one hand we lose from the other," the Confindustria chief said. Squinzi emphasised that "those who are determined to grow will grow" by entering the global market - "something Italy absolutely needs". "The country needs to roll up its sleeves," Squinzi said. Following the release of its report filled with grim economic figures for manufacturing in crisis-ridden Italy, Confindustria presented a list of five proposals for the government to revive the economy. Confindustria's research center vice president, Fulvio Conti, said that they are measures "a responsible government should promptly translate into action". The points outline "a mission for which the new government can count on the support of industry," but that require "courageous decisions and a strategy for more growth through a robust industrial policy," Conti said. To start with the program recommends the "mother of all reforms" that would create "less bureaucracy" and a simplification of procedures. The next steps recommended are cost cuts for businesses and labor through "lighter taxation". For society as a whole, Confindustria calls for a cuts to "restore liquidity to the economy" by paying public sector debts to private companies and support for access to credit for small-medium enterprise. The fourth point calls for reforms to make the labor market less cumbersome and inefficient, with "an agreement between generations", incentives and tax breaks for young people, women and the less developed south. For the fifth recommendation, Confindustria proposes a reduction of taxes on investments in research and innovation and stimulation of public and private investments in infrastructure "even by the means of tax credit".