OECD: More fiscal tightening needed in euro zone

The Organisation for Economic Cooperation and Development has told euro zone countries that they must cut public spending further to reduce their debt, even though that is likely to dampen economic growth in the near term.

It also wants the European Central Bank to withdraw its stimulus measures if inflation starts to pick up.

The OECD – which provides policy advice to its member governments – said the region faces a subdued recovery as it adjusts to austerity economics, but its prospects are improving.

A survey of leading indicators by the OECD showed growth in the euro zone was flat in October, unchanged from both September and August.

Britain also reported no growth in October.

Around the world economic activity accelerated most in the US, China and France while moderating slightly in Germany and Japan.

The major five Asian economies posted the biggest increase in October but even that was slower compared to the region’s performance earlier this year.

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