For a while it appeared as if things had calmed down in Europe. The region's economy has been recovering slowly and Greece is diligently working on track toward fiscal consolidation.

But Jörg Krämer, chief economist at Commerzbank, has raised a warning flag. “On the one hand, we are seeing some progress, for instance in Spain, Portugal and Ireland,” he told DW, adding that these countries have regained their competiveness through reforms. “But on the other, we still haven't seen a reform breakthrough on a broad front and particularly not in the largest crisis country - Italy.”

Need for reform

Labor costs in Italy continue to rise more sharply than the eurozone average, despite the bloc's sovereign debt crisis, Krämer warns, while the country's competitiveness continues to decline.

Problems are surfacing elsewhere as well. At their most recent meeting in Vilnius, Lithuania, EU finance ministers reprimanded France, Europe's second largest economy, for resisting reform.

Slovenia also threatens to become a problem child because of its banks, which are sitting on a mountain of bad debt. Meanwhile, the aid packages for Ireland, Spain and Portugal are due to end in fall.

More money for Greece

Now on top of this, with the German federal election looming, Greece needs more money - as much as 11 billion euros ($14.7 billion) for the next two years, estimates Johannes Mayr, a euro expert at the Bavarian state bank Bayern LB. “And a follow-up program will be necessary, perhaps with a volume of 10 billion euros, to help the country make the transition to private capital markets,” Mayr told DW.

Does all of this mean that Europe is headed toward a rocky fall and a return of the euro crisis? Commerzbank's Krämer doesn't rule out the possibility. For him, the causes of the crisis are far from resolved. “We have not seen reform efforts on a broad scale, and in the background we have the European Central Bank, which is camouflaging the crisis through its policy of cheap money and the prospect of government bond purchases.”

Lack of competiveness, excessive budget deficits and insufficient bank controls are all basic problems that are far from resolved. And when it comes to structural reforms and fiscal consolidation, northern European countries often face the accusation that they are forcing problem countries in southern Europe to accept devastating austerity measures.

Austerity continues

Economist Mayr doesn't buy that argument, however. “If the public sector doesn't want to help permanently with transfers, then these structural and consolidation reforms are essential,” he said.

Krämer agrees. “There is no economically viable alternative to a harsh austerity program,” he said. And the Baltic countries, he adds, show that there is light at the end of the tunnel. “They launched a brutal austerity program a few years ago,” he said. “It was very painful but the crisis is over and these countries are prospering again.”