The long road back

By R.A. | LONDON

AT LONG last the second leg of the euro area's double-dip recession seems to have come to an end. In the second quarter of this year, the euro zone grew by 0.3%, or a 1.2% annual pace. That marked the first rise in output since the third quarter of 2011. Olli Rehn, vice-president of the European Commission noted that "self-congratulatory statements suggesting 'the crisis is over' are not for today", though he also mused that the figure "supports, in my view, the fundamentals of our crisis response". Here is a bit of context—the path of real GDP for America and Britain since the fourth quarter of 2007:

And one should keep in mind that America's economy is still operating with an estimated output gap, relative to potential, of about 5% of GDP.

Still, growth is better than no growth. But there are many reasons to keep the corks in the champagne bottles for now. One is that euro-area expansion masks major internal divisions. Germany's economy grew at a healthy clip in the second quarter, but the Greek, Italian, and Spanish economies are still stuck in recession. That is particularly worrying given that the periphery has lost the most economic ground over the past half decade; a Germany-powered recovery implies continued widening in living standards within the euro area.

Once broad-based growth returns, the pace of the rebound will prove critical. The periphery has been slow to adopt reforms, and there will be constant pressure to use growth as an excuse to step up budget cuts and tighten monetary policy. But a too-slow recovery could mean big trouble for the masses of jobless workers in southern Europe, who will face skill atrophication and alienation from the labour force. One suspects the political fall-out from the last half-decade's misery has only begun to accumulate.

Europe is to be congratulated on avoiding a Depression (in most of its member states) and a catastrophic break-up (for now). But if Europe's leaders are wise they would use this occasion not to celebrate but to reflect on just how badly they have performed, and to get busy learning from their mistakes.