But while some of Europe’s peripheral countries have returned to the international debt markets, and ratings agencies have improved their outlooks on places such as Portugal, there remain some potential headwinds on the horizon.

The most obvious is the threat of low inflation or deflation. Latest figures from the Organisation for Economic Co-operation and Development (OECD) show consumer prices index inflation in the OECD Europe region in Q1 2014 increased just 0.2 per cent from the previous quarter.

Meanwhile, economic growth in the region may also be starting to stall. Eurostat figures for the first quarter of 2014 show the euro area recorded seasonally adjusted GDP growth of just 0.2 per cent, the same as the final three months of 2013, while GDP growth across the European Union as a whole was only slightly higher at 0.3 per cent.

The Eurostat Flash estimate shows that of the 20 European countries with Q1 growth figures available, six of these economies were contracting. Estonia saw its economy shrink by 1.2 per cent in the quarter, while the Netherlands posted the largest contraction of 1.4 per cent. In contrast, the strongest growing countries in the first three months were Hungary and Poland, both countries posting growth of 1.1 per cent.

The political situation in the region could also become more complicated following the results of European Parliamentary elections and the rise of eurosceptic political parties, particularly in France, Italy and the UK.

James McCann, OECD economist at Standard Life Investments, explains: “The risk is, if we do see the success of these non-mainstream parties, it could be bad for future EU integration. You could see that start to stall.

“One of the key problems with the eurozone is it has been a monetary union but the fiscal union behind it has been lacking to a certain extent. So if political will towards further integration starts to stall, then some of those fractures could remain in the longer term.”

Kerry Craig, global market strategist at JPMorgan Asset Management, notes that markets do seem to have become less sensitive to unexpected political events.

“This is good for markets and reduces volatility, but the risk is that governments will feel less pressure to push ahead with economic, fiscal and social reforms, possibly delaying progress and undermining investors’ confidence in the recovery,” adds Mr Craig.

Nyree Stewart is features editor at Investment Adviser