Sir, In arguing that the euro crisis has receded, leaving egg on mostly Anglo-Saxon faces, Philip Stephens echoes the misplaced sense of complacency and triumphalism currently prevailing in European policy making circles (“Gloomsters were wrong to bury the euro. Here’s why”, February 1).

Like those policy makers, Mr Stephens fails to observe that, while the European Central Bank’s aggressive outright monetary transactions programme has certainly succeeded in restoring market calm, it has failed to address Europe’s underlying fundamental weaknesses that continue to threaten the euro’s long-run survivability.

Whether the euro crisis has indeed receded, as opposed to it only being in temporary remission, will depend crucially on whether the European periphery can be extricated from its very deep economic recession. Sadly, the latest economic indications do not appear to be good. Not only is the economic recession deepening in the European periphery, it also appears that economic weakness has now spread to countries in the European core, including Germany.

More disturbing yet is that all countries in the European periphery are persisting in applying in 2013 very much the same policy mix that substantially deepened their economic recessions in 2012. The question that the European optimists need to address is how the European periphery can emerge from recession by continuing to apply a policy of severe fiscal austerity at a time that their banks are experiencing a serious credit crunch, Germany is now slowing, and Europe’s main trade partners are all pursuing competitive exchange rate policies.

Further clouding the European outlook is the fact that the present market calm has substantially slowed policy movement towards either banking union or fiscal union, which would seem to be necessary conditions for the euro’s long-run survival. This constitutes yet another reason for regretting that European policy makers have allowed themselves to be lulled into a false sense of security by positive market movements that in the past have all too often proved to be ephemeral.