The latest political crisis was sparked over the weekend, after interim Prime Minister Carlo Cottarelli failed to win enough support from major political parties for even a stop-gap government. The country has been trying to form a new government since March; the latest deadlock could force President Sergio Mattarella back to parliament in the coming days and send Italians back to the polls as early as July 29.



Italy's central bank warned on Tuesday the nation was only "a few short steps" from losing investors' confidence, as financial markets suffered the biggest sell-off in years on fears that new elections could become a proxy vote on Italian membership in the euro.

Backlash over the idea of a unified Europe comes as European Union and United Kingdom leaders have yet to resolve the terms of the U.K.'s departure from the bloc, after British voters last year approved the so-called Brexit referendum. A similar move by Italy would strike a potentially fatal blow to the 25-year-old political and economic union.

The political stalemate in Italy intensified after a March national election which saw heavy turnout for two populist parties: the anti-establishment 5-Star Movement and the anti-euro League party.

Some political analysts believe that the latest deadlock over the weekend could strengthen those parties' positions, raising further doubts about Italy's continued membership in the EU and use of the common currency.

"Italy will be wrapped in a long drawn-out period of wrangling that will feature intense anti-establishment and euroskeptic tones," political analyst Wolfango Piccoli told the Associated Press.