That was a very good experience for the young English players, however disheartened they may have been as they came home yesterday. Going into extra time and penalties in a tournament quarter-final like that will serve them well. But the Italians had more quality – we can't ignore that – and though the Football Association is trying to change things, we cannot disguise that it is still a long way off creating a system which enables England's players to compete with the very best in Europe, or the world.
I think Italy had an incentive to prove on Sunday night that their football is good, because they are no longer on top in the Champions League competitions now, and they really did demonstrate the technical distance between the two nations. There are many changes required in the way this country develops its young players. To make them more competitive, England above all need the clubs to decide on the style of football they want to play, from academy right through to first team. They must then coach the coaches in that style and then coach the players.
For me, there is a very big weakness in the system when the players reach 18. At that age, a player in England who is not quite at the required level to play in the Premier League has to go off on loan to a League One or Two team, where it is very difficult for him to develop the basic skills in the way he would at his club. The style and standard of coaching will probably just not be the same.
Those players who are of a slightly better standard but still not quite good enough to play in the Premier League will end up sitting on the first-team bench, and could be stuck there for years. Take Scott Carson, for example. He was the best player at Leeds United and then joined us at Liverpool, but he hardly played a game for three years.
When I arrived at Liverpool, this problem struck me and I said that our reserve team should play in the Football League pyramid. I wanted to use the experience of my years as a player and manager of the Real Madrid reserve team, which played in the Spanish second division. Joining the pyramid was important, but nobody wanted to hear or listen and I was told that I was going against an English tradition by suggesting this. I think people can see the problem a little clearer now.
If we assume the English reserve teams will not be allowed to compete in the pyramid, the only way to create matches for these young players is by making the Reserve League a proper Under-21 national competition, which allows teams to select a limited number of first-team players to help them recover from injury or keep match-fit. I know the Premier League is working on this for next season. It must be a competitive Under-21 league in spirit.
But it is the introduction of the same style of play throughout a club – and seriously investing in the coaching system to make that happen – which underpins the creation of more technically equipped players, and it was in the final year at Liverpool that we linked the academy and club more closely to make that possible.
There are plenty of myths about this idea of one style of football running throughout the club. For example, just because Barcelona have become such a successful club, everybody now talks about wanting to play "like Barcelona". But we were talking about having a consistent style throughout the club at Real Madrid over 15 years ago. How can you play "the Barcelona way" if you don't have Xavi, Iniesta and Messi?
It is more realistic to decide on a system; deciding, for instance, that you want to play the ball on the floor, not in the air, and then you need to create a philosophy at your club where everyone has the same one. You stick to it, no matter who is manager, and you appoint a manager with that vision. (If it's a non-football person who decides on the vision, it could be a problem.)
At Liverpool, we created this link between the academy and the first team by appointing Pep Segura, who had been at Barcelona, as the academy's technical director, with Rodolfo Borrell as Under-18s coach. We agreed which systems we would use and which style. In England, the individuals who are asked to coach the coaches and help spread the playing philosophy are very, very important. You can't just work with computers and databases of young footballers.
I have also been advocating for several years that clubs should be allowed to recruit young players from anywhere and that change, now allowed for in the Premier League EPPP document, cannot come soon enough. At Real Madrid, we trialled hundreds of boys a year from Madrid and all over Spain. If the best cannot work with the best, they will not progress.
I don't think England should be too worried about the number of overseas players in the Premier League. The country's young footballers can learn from those players, their different styles and ideas. And I don't think that the 4-4-2 system which Roy Hodgson used at the European Championship will prevent technically talented players being put to best use for the national side. The 4-4-2 style can become 4-2-3-1 when a team attacks. It's the football philosophy that counts, not the system.
It is a question of what you want to do when you are in possession and what you want to do when you are not in possession. It is about people having more ambition, more confidence in their game to try things out and to get into the box. The improvement in basic technical skill that we are talking about and the confidence in a philosophy which is instilled into players will solve the problems. I have been saying this for a number of years but it is very hard to be heard sometimes!
England have to look forward. Finding top players is not the problem. The potential is out there, all around. It is how to develop it which people should be talking about.
Miki's death puts Euros in perspective
The death at the weekend of one of the first players I signed at Liverpool, Miki Roque, has really put the European Championship into perspective for me.
It was a shock, because when I was in contact with Miki's family after he was diagnosed with a tumour in his pelvis last year it seemed that the operation had gone well.
He came to us from a modest level of Spanish football and threw himself into English life.
Of all the Spanish players I have signed, I don't know if any had such good as English as Miki.
He came on in the Champions League for us at Galatasaray and in the end he returned to Spain to further his career at Real Betis.
He was a friend of our Austrian forward Besian Idrizaj, another player whose life was lost when he suffered a heart attack, two years ago. The game of football really is the most insignificant thing. Rest in peace, Miki.
'Champions League Dreams' by Rafael Benitez, is published in September by Headline Books. Rafael’s website, rafabenitez.com, provides more tactical analysis and insight into Euro 2012 and wider football issues.