By Simon Miller
The eurozone needs to boost its firepoweer by at least €1trn (£0.835trn) according to the OECD.
Speaking at the launch of the OECD's economic surveys of the Euro Area and the European Union, its secretary-general Angel Gurría said the current level of commitment to the rescue funds is not enough to restore market confidence and a credible financial firewall would provide governments with the breathing space they need to focus crucially on revitalising Europe’s economic growth and competitiveness.
"Weak financial conditions, fiscal consolidation and economic adjustment are restricting demand in the short-term before the long-term benefits on stability and growth are felt,” Gurría said. “Decisive action to restore confidence and support demand is needed now.”
He added: "The recent measures already taken to strengthen fiscal discipline, provide liquidity and implement growth-enhancing reforms – particularly in Greece, Italy, Portugal and Spain - are important advances towards a brighter economic outlook, but the challenges remain daunting.”
The OECD survey calls for an ambitious programme of reforms in product and labour markets, tax systems and education to rebalance the economies, restore competitiveness , boost growth and bring down stubbornly high levels of unemployment – particularly among the young. It argues many reforms would stimulate growth even in the short-term.
“Europe is stalling. It needs to get out of first gear and make growth the number one priority,” said Gurría.