Stephanie Flanders
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Italy borrowing costs hit record 7%

Italy's cost of borrowing has touched a new record, a day after Prime Minister Silvio Berlusconi said he would resign once budget reforms are passed.

The yield on 10-year government bonds reached more than 7%, the highest since the euro was founded in 1999.

The BBC's Economics editor Stephanie Flanders explains why Italy's debt problem is escalating.