The core eurozone countries – Germany, France and Italy – find it difficult to reform when times are bad. Invariably, governments intervene to protect voters from the downturn. Worse, these countries also find it hard to reform in good times. Governments often confuse a cyclical upturn with a secular improvement, and ease up on necessary but uncomfortable reforms.

Thankfully, 2008 promises to be neither particularly bad nor good for the eurozone. It is therefore a propitious moment in both econ­omic and electoral cycles to deliver on reform. It is true the fallout from the credit crisis, the strong euro and high energy prices will make life trickier for exporters and governments. But the eurozone economy is still growing around trend. Many economists expect this to continue into 2008 – albeit with some softening in mid-year.