Italy is finding it hard to convince anyone to lend it more money and there is a risk of exposure for the European banks which have lent to it in the past.

Alberto Gallo, senior credit strategist at RBS said that Italy's debt will "hit hard across Europe" as much of the country's debt is held in banks outside Italy.

The markets are likely to keep testing the European Central Bank's treatment of Italy, he said.

Charles Dumas, chief economist at Lombard Street Research, said that it will be very hard for Italy to create any economic growth either domestically or internationally.

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