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For decades, European governments could count on the "easy growth" that came with the expansion of the global economy and the magical powers of leverage. That allowed politicians to curry favour with electorates by expanding bureaucracies and welfare systems, encouraging rent-seekers, introducing rigid labour laws and extending privileges to vested interests. The result was that wages rose faster than productivity growth.
Now European governments have little option but to undertake structural reforms to remove obstacles to productivity growth. Spain, Portugal and Greece have made substantial overhauls and are starting to see the benefits. Now France is following their lead. Paris insists this month's announcement of fresh tax and spending cuts isn't a U-turn but an acceleration of existing plans. But the shift in language is striking. "France is not an unreformable country", Finance Minister Pierre Moscovici told The Wall Street Journal last week. "[France] has to be reformed."
Even Italy, long regarded as the most unreformable country in the eurozone, may be starting to stir. The election of Matteo Renzi, the 39-year-old mayor of Florence, as secretary of the Democratic Party has electrified the political landscape. A deal on electoral reform looks possible, a first-step toward the election of a majority government with a mandate to undertake reforms, most likely led by Mr Renzi himself.
Meanwhile, reform may be coming at a European level too. The UK government is shifting away from its confrontational approach toward the EU and has started to set out a constructive agenda to deepen the European single market and boost the Continent's competitiveness, winning allies in the process. There is also strong political support in the EU for an ambitious trade deal with the US.
A reasonable objection is that all this talk of reform so far remains just that: talk; that the only countries to have undertaken meaningful reform so far in the crisis have done so under intense external pressure; and that the current modest recovery is more likely to ease that pressure. President François Hollande has yet to give details of French reforms, while Mr Renzi has yet to set out a clear manifesto.
But it is hard to underestimate how the apparent success of reforms in Spain and Portugal has pulled the rug from under those who argued that the answer to Europe's problems was debt mutualisation and money-printing. President Hollande's transformation from Socialist to Social Democrat is evidence of a lack of realistic alternatives to reform. Markets have shown that they are unforgiving of countries that fail to change flawed economic models, as Argentina and Turkey discovered last week.
That doesn't mean that reform will be easy or go as far as some hope. Nor is it likely to work so quickly as to transform Europe's lacklustre prospects in the next two years. But on a 10-year view, the direction of travel seems clear—and a reason to be upbeat.