EU Sets in Motion Discipline Process Against Italy Over Debt

The European Union took the first step toward disciplining Italy over its failure to rein in debt, intensifying a dispute with Rome and paving the way for an initial penalty of as much as 3.5 billion euros ($4 billion).

In a report published Wednesday, the European Commission said Italy hasn’t made sufficient progress in reducing its mountain of debt in line with the bloc’s fiscal rules, and that a disciplinary process is “warranted.” The step marks an escalation of the country’s budget tussle that roiled markets at the end of 2018 and is a warning for Italy’s populist leaders, particularly Deputy Premier Matteo Salvini who has vowed to change EU budget rules.