In the last four years, the three largest credit rating agencies, which between them rate almost all of the world’s credit, have risen on the coat tails of Europe’s sovereign debt crisis to become the stuff of headlines

Starting with the speculation over a Greek sovereign debt default, rating agencies have since grown to become the most prominent odd-setters on the prospects of a crisis-stricken country. That is, after all, part of their role. Yet never before have their ratings held so much influence over the broader global economy or featured so widely in the international media.

Not long ago, an article on the economic outlook for the year ahead would have cited an IMF global forecast, or a European Central Bank paper on the eurozone’s annual growth trajectory. Now, perhaps because these multilateral financial institutions are themselves embroiled in the sovereign debt crisis, their role as forecasters has been overshadowed by an ostensibly more independent set: The rating agencies. From supplying an opinion on the credit-worthiness of individual public institutions and private companies, the forecasts of these agencies are now able to colour the prospects for growth of an entire continent.

The sweeping downgrade of several EU member states’ debt – including Malta’s – instituted last week by Standard & Poor’s signalled a damning start to the year for Europe. Even the European Financing and Stability Facility, the eurozone’s rescue fund, was knocked down a notch. Moody’s and Fitch, the other two major rating agencies, are sure to follow, lest they be taken for untethered optimists. Moreover, national leaders in Europe are yet to set in stone the intergovernmental treaty on stronger economic governance and neither have they reached consensus on the controversial financial transaction tax – a French-inspired measure to help bolster public finances.

Things can hardly get worse for the eurozone’s debtors. Or so it seems.

Despite the credit rating agencies’ negative outlook, countries that were only just downgraded have since seen interest rates on their bonds fall. Spain, Portugal, and most recently France, have all managed to sell off several billion euros worth of bonds with lower interest rates than in their last public auctions. The price they pay for money, oddly, has fallen along with their creditworthiness. Even Italy held a successful bond sale this month. The European Financing and Stability Facility too has managed to raise considerable sums on the bond markets. Why, then, the mismatch between the verdict of the markets and the ratings of the agencies?

In Standard & Poor’s postmortem of Europe’s economic future, which followed the downgrade of most eurozone members, the agency highlighted the fact that eurozone governments, in their focus on austerity, have neglected the need for deeper economic restructuring across the bloc. The agency pointed to the persistent economic imbalances between surplus economies, like Germany’s, and trade and budget deficit prone economies like Italy’s. It underlined the bloc’s disparities in terms of economic competitiveness and the need for structural reforms to address this.

The implicit acknowledgement in this critique is that austerity measures have gone some way towards restoring market confidence in some of the worst hit eurozone members, like Portugal and Spain. The deeper causes of the crisis, the structural imbalances in productivity and competitiveness, have of course yet to be addressed. These are deep-seated flaws that can only be tackled once we’ve moved beyond the firefighting stage of the crisis. But until then markets are beginning to reward the deficit-busting efforts put in by some of the countries that had become bywords for Europe’s debt woes.

None of this has come easily. We’ve all borne witness to the mass protests against austerity measures in Lisbon, London, Madrid, Paris, and Rome. Neither could any of us overlook what the Greek population has had to endure, and with few results to speak of so far. We are, however, beginning to regain the confidence of the markets and in doing so, it seems, we have spared our economies the consequences of decisions taken by the rating agencies.

Through the tough measures that they have instituted over the past couple of years, the eurozone’s most embattled economies are once again becoming the arbiters of their own economic prerogatives. It now falls to the bloc’s large surplus economies to do their part to readdress the eurozone’s economic imbalances; not only out of solidarity for the countries under austerity measures but also for the sake of the entire single currency zone.

David Casa is a Nationalist MEP