Romano Prodi's coalition appears to have emerged victorious in the Italian elections; but only by a hair's breadth. Silvio Berlusconi's coalition continues to dispute the results. A new government will not be formed, in any case, until the election of new president next month. Votes from Italians living abroad are still being counted. Who knows what Florida-style legal challenges or recounts may lie in store? There may even need to be fresh elections before the question of who governs Italy is settled. Rather than delivering the clear result Italians had hoped for, this election only seems to have given birth to more uncertainty.

Yet, despite this, it seems likely - judging from the Prime Minister's uncharacteristically low profile yesterday - that the Berlusconi era is at last coming to an end, and the longest-serving Italian government since the Second World War (a mere five years) has finally run into the sand. Italian politics will undoubtedly be a more civilised place with the demise of "Il Cavaliere". With outstanding charges of embezzlement, tax fraud, false accounting and bribery hanging over him, Mr Berlusconi was never fit to hold public office in the first place. And his shameless attempts to evade justice and the abuse of his vast media empire while in office have merely confirmed this. But, sadly, the prognosis for Italy in the wake of his fall is far from encouraging.

It was always going to be immensely difficult to implement the economic and social reforms that Italy so badly needs, regardless of which side prevailed in this election. Now that the next governing party will have a razor-thin majority, the job threatens to be impossible. Few are optimistic that Mr Prodi's ramshackle coalition of Christian Democrats, moderate leftists and hard-line communists will survive the pressures of office for long. Unsurprisingly, the Milan stock exchange took a downward turn in response to yesterday's result. The winning coalition will automatically be awarded 55 per cent of the Lower House seats. But this hardly adds up to the mandate needed to turn Italy around. And the fate of Italy matters deeply to the rest of Europe. For all its problems, Italy is still the world's seventh largest economy and a key member of the Eurozone. It is in none of our interests for its stagnation to continue.

Some have jumped to the conclusion that the failure of this election to deliver a clear result discredits proportional representation. But this interpretation is unfair, because it ignores the fact that in this election the two big coalition blocs were already in place. All the political haggling that PR's critics dislike was complete. This was effectively a two-party race in all but name. What this result illustrates is not so much the deficiencies of the Italian voting system but that Italians are genuinely divided into two camps. And those who choose to castigate the Italian voting system should bear in mind the impressive 83 per cent turnout.

But it would be pointless to deny that this result is deeply unfortunate in a wider sense. Three of Europe's largest economies are now in difficulties. The old heartlands of the Eurozone are clogged by high unemployment and starved by low growth. And yet the political systems of France, Germany - and now Italy - are failing to produce the necessary solutions.

Mr Berlusconi's fall throws another aspect of Europe into relief, too. The position of leadership of the EU is glaringly vacant. Jacques Chirac in France is coming to the end of his political life span. Angela Merkel in Germany is new to her job. What a pity that both Tony Blair and Gordon Brown have failed to grasp this golden opportunity. Italy is crying out for a brave leader. Europe is, too. Whether either will get them remains - at this stage - distinctly doubtful.