As the eurozone has officially emerged from a long recession during the third quarter of 2009, Brussels is insisting with members of the bloc that now is the time to implement structural reforms in order to get public finances in order in the long term.
In its quarterly report, the European Commission said that at the end of the third quarter, the eurozone economy expanded by 0.4 per cent, quarter-on-quarter, marking the end of the recession, after five consecutive negative quarters.
However, for 2009 as a whole, GDP is expected to have contracted by four per cent, according to the autumn forecasts, the biggest fall in output since World War II.
Although the 16-member eurozone as a whole is now out of recession, not all member states are. Malta is statistically still considered to be in recession-mode and according to the Prime Minister, Malta's economy is only expected to exit recession during the second half of 2010.
Despite an economic rebound in the eurozone, the Commission said that the economy is still fragile and member states should do their utmost to implement long-term reforms in order to make sure that the economic recovery is on a sound footing.
"The rebound in activity reflects improvements in the external environment, in financial conditions and in confidence.
"But the outlook remains uncertain as the rebound is underpinned by the massive support provided by governments and central banks worldwide which eventually will have to be scaled back and depends on the ability of the banking sector to increase the present levels of lending to the economy," the report states.
Unemployment is also still a source of concern. According to the Commission, in the third quarter employment in the eurozone continued to contract at the pace of 0.5 per cent quarter-on-quarter and unemployment increased to 9.6 per cent of the labour force.
"Compared to the size of the output loss and notwithstanding country differences the increase in unemployment was, however, smaller than feared," the Commission said.
Malta has still not seen a major upturn in unemployment with moderate increases which are lower than eurozone levels.
Analysing public attitudes towards structural reforms and the extent to which the crisis may have affected that perception, the quarterly report states that a recent Eurobarometer surveys shows that the crisis has increased people's awareness of the need for reforms in most eurozone countries. Member states that have been hit more severely have experienced the largest rises.
"While, ideally, reforms should be carried out in good times, this increased support creates a window of opportunity to address structural impediments to growth and to lay the foundation of a solid and sustainable recovery," the Commission said.
The EU executive also announced that at the beginning of next year it will come up with proposals on a new strategy for coordinating structural reforms in the EU that will succeed the current Lisbon Strategy.