Financial Times
May 22, 2012
The Organisation for Economic Co-operation and Development has joined French and EU officials in calling for a move towards jointly-guaranteed eurobonds at a time it sees as perilous for the global economy.
In its twice-yearly economic outlook, the Paris-based international organisation which specialises in economic policy for advanced economies, warned of a vicious circle in the eurozone, “involving high and rising sovereign indebtedness, weak banking systems, excessive fiscal consolidation and lower growth”.
It said that the “global economy is, once again, trying to return to growth” with the US, Japan and emerging economies showing steady recoveries, but the progress is threatened by the new crisis in the eurozone.
So long as the eurozone crisis does not escalate, the OECD is forecasting a modest contraction of 0.1 per cent in the eurozone economy this year, compared with growth of 2.4 per cent in the US and 2 per cent in Japan.
To get a grip on Europe’s problems, the OECD said it was imperative that crisis management went hand in hand with the construction of institutions to make monetary union “work properly”.
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