Italy beat England 1-0 in Tel Aviv on Wednesday evening to move to the top of European Under-21 Championship Group A.
A second-half free-kick by Lorenzo Insigne was enough to separate the sides and Stuart Peace's men can have few complaints.
With Israel and Norway drawing 2-2 earlier in the day it provided the winner of the late kick-off with the chance to claim top spot in the group.
England came into the game without conceding a goal in nine matches but started far more anxiously than their opponents and the Italians dominated for large periods of the first-half with Paris Saint-Germain's Marco Verratti the pick of their players.
Liverpool forward Fabio Borini and Ciro Immobile were causing problems too with their movement and Immobile had the games first chance leaving Craig Dawson for dead before firing wide.
Alessandro Florenzi started to enjoy himself more down the right as the half went on first setting up the equally impressive Insigne on the other flank and then Immobile again.
Then, just as England threatened at one end through Nathaniel Clyne, Italy hit back on the counter attack and Jack Robinson appeared to get away with fouling Florenzi in the penalty area.
England manager Stuart Pearce will certainly have been more than relieved to go in at the break all square.
To England's credit they started the second period far brighter and could have taken the lead through Dawson from a corner. The whistle had already gone though and Steven Caulker was penalised for fouling his man in the box during the build up.
That was the only positive moment in a very disappointing evening for England and it was made all the worse when Manolo Gabbiadini got the better of Clyne only for the Southampton man to bring him down.
The Italian players wanted a penalty but it didn't matter as Insigne converted expertly from the edge of the area to send them to the top of the group.
Pearce will expect a much improved performance against Norway on Saturday.
| England U21 | Team Statistics | Italy U21 |
| 0 | Goals | 1 |
| 0 | 1st Half Goals | 0 |
| 2 | Shots on Target | 2 |
| 4 | Shots off Target | 10 |
| 1 | Blocked Shots | 4 |
| 1 | Corners | 6 |
| 17 | Fouls | 14 |
| 3 | Offsides | 1 |
| 2 | Yellow Cards | 2 |
| 0 | Red Cards | 0 |
| 75.2 | Passing Success | 83.6 |
| 11 | Tackles | 18 |
| 90.9 | Tackles Success | 66.7 |
| 38.8 | Possession | 61.2 |
| 50.4 | Territorial Advantage | 49.6 |
| 323 | Total Passes | 529 |
| 10 | Total Crosses | 16 |
| 142 | Lost Balls | 133 |
| 50 | Recoveries | 51 |
| 35 | 1st Half Poss. | 65 |
| 40.4 | 2nd Half Poss. | 59.6 |
Laudrup signed a new contract last season but has attracted the attention of several clubs since winning the League Cup.
However, it is understood that Laudrup is not happy with the transfer budget the club have planned for.
It is understood that Laudrup and Jenkins have not talked for a week, and that the manager's agent Bayram Tutumlu is acting as an intermediary between the two.
Last summer Swansea twice spent £5million on players when signing the likes of Pablo Hernandez and Ki Sung-Yueng - but sources say Laudrup wants to spend double that on some players this summer.
