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| OECD downgrades growth forecasts and calls for more stimulus | OECD downgrades growth forecasts and calls for more stimulus |
| (35 minutes later) | |
| The Organisation for Economic Co-operation and Development called for countries across the world to cut rates and expand stimulus programmes, as it warned that the slowdown in leading industrial nations could continue until the end of the year. | The Organisation for Economic Co-operation and Development called for countries across the world to cut rates and expand stimulus programmes, as it warned that the slowdown in leading industrial nations could continue until the end of the year. |
| The Paris-based thinktank said the global economy had weakened since spring and cut growth forecasts for the G7 countries. It expects Britain to be among the worst hit, with a 0.7% decline in output this year, compared with its previous forecast of a 0.5% drop. By contrast, the combined economies of Germany, France and Italy are expected to shrink by just 0.2%. The US economy will continue to grow, it says, helped by improvements in the housing market and some progress on tackling its debt. | |
| It said the eurozone crisis has damaged trade and confidence across the globe and will continue to do so throughout the year. Within the currency bloc, it noted that weakness in peripheral countries is spilling over to the core countries of Germany and France. | It said the eurozone crisis has damaged trade and confidence across the globe and will continue to do so throughout the year. Within the currency bloc, it noted that weakness in peripheral countries is spilling over to the core countries of Germany and France. |
| In its interim assessment of the global economy, it wrote: "The loss of momentum at the G7 level may persist through the latter half of this year, with the recession in the euro area and associated trade and confidence headwinds enduring." | In its interim assessment of the global economy, it wrote: "The loss of momentum at the G7 level may persist through the latter half of this year, with the recession in the euro area and associated trade and confidence headwinds enduring." |
| The OECD said monetary policy across the globe should be more supportive, especially in the eurozone. "Where activity is weak and inflation under control, policy rates should be cut if they are still above zero, and asset purchase programmes could be expanded. In large emerging market economies, current policy should be continued or additional stimulus provided, depending on the country-specific outlook." | The OECD said monetary policy across the globe should be more supportive, especially in the eurozone. "Where activity is weak and inflation under control, policy rates should be cut if they are still above zero, and asset purchase programmes could be expanded. In large emerging market economies, current policy should be continued or additional stimulus provided, depending on the country-specific outlook." |
| It urged the ECB to cut the rates at which banks borrow from it, and take "further action" to address the ongoing crisis – ahead of the central bank's eagerly awaited announcement later on Thursday. | It urged the ECB to cut the rates at which banks borrow from it, and take "further action" to address the ongoing crisis – ahead of the central bank's eagerly awaited announcement later on Thursday. |
| It said the US should ease monetary policy, if the labour market deteriorates; and urged the Bank of Japan to expand its version of quantitative easing. In China, it said, inflation has come down to the extent that some of the recent policy restraint could be clawed back, but suggested that should be accompanied by a means to guard against overheating in housing markets. | It said the US should ease monetary policy, if the labour market deteriorates; and urged the Bank of Japan to expand its version of quantitative easing. In China, it said, inflation has come down to the extent that some of the recent policy restraint could be clawed back, but suggested that should be accompanied by a means to guard against overheating in housing markets. |