The cost of borrowing money in Italy's government has risen considerably today as the stock market has fallen.
The same thing has happened to Spain and this indicates how one crisis so quickly spreads to another.
One of the flaws in the structure of the Euro is that you have national democracies where the will of the people is supposed to decide policy and yet when you are tied to other countries by a single currency you cannot just go your own way.
If a country threatens to go its own way it could potentially do serious damage to all of those around you.
That's why we are hearing political voices all over Europe saying to the Italian people they cannot have their own policies if you are going to stay in the Euro.
A senior aide to Chancellor Merkel today warned that the Eurozone crisis may come back after we thought we left the crisis a long time ago.
The man who is likely to be Italy's next Prime Minister for a short time at least, Pier Luigi Bersani, gave a very downbeat speech today.
He said that although they came first in the Italian election, they didn't win it.
There's a similar downbeat mood across Europe, where apart from telling Italians they must stick with their programme whatever their people say, there's a realisation this could affect them all.
A senior aide to Chancellor Merkel says that the financial crisis in Europe may come roaring back.
We well remember what happened when Greece rejected austerity, and although Italy's much bigger, the implications could be that much worse.
Italy's centre-left political leader, Pier Luigi Bersani has appealed to the country's parliament to resolve the political deadlock which has left the Italian people without a ruling party.
Bersani's party defeated former Italian Prime Minister and centre-right leader Silvio Berlusconi to gain the most seats in the election at the weekend, but failed to gain the Senate - which is necessary to legislate.
The Democratic Party (PD) proposes basic austerity reforms in government and could now try to form a "grand coalition" with Berlusconi or Beppe Grillo - who stunned the country by securing a quarter of the vote on Monday.
Talks between the main parties continued today and are set to resume on Wednesday.
Italy's public and private sector institutions owe nearly $50bn to British banks, figures reveal.
The statistics detail Italy's debt to the UK banking sector as the country remains in a political deadlock with no party securing an overall majority in the country's election.
Britain's banks' external exposure stood at $2.7 trillion in June last year, according to the Bank for International Settlements.
Italy's current debt to the UK is less than the $66bn the country owed at the end of 2010.
The former TV comic whose anti-establishment "non-party" won more votes than any other single party in Italy's deadlocked election has showed no early signs of wanting to negotiate for power.
Beppe Grillo's 5-Star Movement collected almost 8.7 million votes overall, a tally which only trailed the multi-group blocs of the centre-left and centre-right.
Commentators said all his adversaries underestimated the appeal of a grassroots movement that found particular favour with young jobless Italians and others weary with Prime Minister Mario Monti's internationally-endorsed austerity agenda.
Mr Grillo, who mixes fierce attacks on corruption with policies that range from clean energy to free internet, surged in the final weeks of the campaign as hundreds of thousands turned up at his outspoken rallies.
British banks have cut their exposure to the eurozone, but still have billions at stake so any impact from the latest Italian political stalemate on the collective debt will be felt.
But how exposed is the UK?
The Italian stock market has fallen and state borrowing costs have risen as investors took fright at the country's political situation following the surprising election stalemate.
The Milan bourse was down more than four per cent at its opening amid the deadlock.
The spread between yields on 10-year Italian and German government bonds widened to 338.7 basis points, the highest since December 10.
Memories in the world financial markets are still fresh of the crisis in Italy, the eurozone's third-largest economy, that took the 17-member currency bloc to the brink of collapse in 2011.
Italian borrowing costs are heading up with no clear election winner, while European bank stocks are sliding too.
Silvio Berlusconi has said all parties and alliances must now reflect on what to do next following deadlock in Italy's election, Reuters has reported.
The former prime minister, fronting the centre-right bloc, acknowledged the centre-left coalition led by Pier Luigi Bersani had claimed Italy's lower house.
Berlusconi's bloc narrowly trailed Bersani's coalition in the vote for the Senate upper house, which proved indecisive, meaning no group has earned a clear majority to form a government.