Spanish and Italian yields were hitting dangerously high levels around 7 percent late last year before the ECB stepped in with its cheap loans. The countries' yields dropped to more manageable levels, but are beginning to creep up again. Spanish 10-year bond yields edged up to 5.42 percent on Tuesday, from under 5 percent a month ago. Italy's 10-year bonds yielded 5.15 percent, also up from under 5 percent last month.
The solution to the debt crisis, eurozone officials, the ECB and economists all say, is structural reforms to make indebted countries more business-friendly by slashing regulation and eliminating costly restrictive labor practices.
As the European economy gets bigger, the relative size of its debt pile shrinks, and higher tax revenues and stronger finances reassure bond investors — so they will loan money at affordable rates.
But those changes to labor markets take time to win approval in parliaments — often against resistance from labor and business special interests. Then they may take years to show results in terms of higher growth.
"The kind of structural reforms that we are talking about will take five, six, seven years to really have a full impact," said Guntram Wolff, deputy director of the Bruegel research institute in Brussels.
For short-term growth, aside from the ECB loans, "we really don't have a story there," Wolff warns.
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