The European economy is facing into its brightest period for more than a decade, according to the chief economist with the European Central Bank.

In a German Sunday newspaper interview, Mr Otmar Issing said the economic outlook was bright for the euro zone but he called for structural reforms to allow the economy to fulfil its potential.

"In all probability we face two good years. The economic outlook is the best for 10 years," Mr Issing said.

"If the euro area takes advantage of this good period, to start pressing structural reforms, then there will be a durable, long, sustained upturn."

If that was the case, there would no longer be the slightest concern over the market value of the euro, he added, referring to the recent weakness of the euro against the dollar.

He pointed to Germany, the euro zone's largest national economy, as needing particular reform. "What's going on in the German labour market is lowering the morale of the euro area," he said.

The ECB has persistently called for reform of euro-zone labour markets, which are especially rigid in Germany, and for restraint in wage settlements.

Mr Issing reiterated the ECB's view that the euro had potential to rise but gave no timeframe for when he expected it to appreciate.

"It is a question of time until the external value fully and fairly reflects the inner stability of the euro," he said. He added that nobody could say exactly when the single currency would reach the full potential of its external value and that even if he did know, he would not say.

A rise in inflation was one possible threat to the appreciation of the euro.

"But that won't happen because the European Central Bank will counteract it in time," he said.