LONDON (AP) -- The worst of Europe's debt crisis is probably over, and the odds are that no country will drop out of the euro.
That, at least, is the view that the credit rating agency Fitch presented Tuesday to financial experts at a conference in London.
Douglas Renwick, senior director of Fitch Rating's European sovereign credit analysis, said the 17 EU countries that use the euro have shown their capacity to muddle through to some sort of resolution of their 3-year debt crisis and that a breakup of the bloc is now "very unlikely."
He said, however, that there is "plenty more" that needs to be done and that fixing the flaws at the heart of the euro project may take the rest of the decade.
Despite its return to recession in 2012, the eurozone, he said, is showing signs of improvement in key areas such as economic competitiveness. The impact of austerity measures on the economy may also have passed its peak, even in Greece.
Renwick said flare-ups and bouts of uncertainty in markets will likely continue. This year, general elections in Italy and Germany and a lack of economic growth in Europe are likely to test investors' nerves.
The cautiously optimistic analysis provided by Fitch echoes improvements in financial markets. Bond investors are back buying the debt of countries at the forefront of the crisis, such as Italy and Spain, reducing their borrowing rates to manageable levels. And the euro is trading near 9-month highs.
Many in the markets attribute the more benign backdrop to two factors: the European Central Bank's offer last summer to buy up short-term debt of countries in financial trouble, and the eurozone's decision in November to keeping helping Greece despite its troubles meeting financial targets.
The ECB's move has removed uncertainty from government bond markets while the Greek deal indicates that the country's eurozone partners are committed to keeping it in the currency bloc.
David Riley, Fitch's global head of sovereign ratings, said the twin moves have provided "breathing space" for the economic imbalances across the eurozone to correct and for politicians at the European level to enact more reforms.
"Whether 2013 marks the beginning of the end of the eurozone crisis depends on governments delivering on deficit reduction and structural reform," he said. "With elections in Italy and Germany and the region in recession, the challenge of maintaining the positive momentum gained in the latter part of 2012 should not be under-estimated."