Officials in Brussels will try to walk a fine line, enforcing European Union rules while avoiding a war of words with Rome that would play into the hands of populists. The commission could penalize Italy by imposing fines or withholding European Union funds for economic development. But the commission rarely moves quickly.
The big risk is that investors will lose confidence in Italy and no longer buy government bonds at interest rates the government can afford, a development that would ripple through the economy. The risk premium on Italian bonds spiked early Wednesday, though it later retreated.