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March 23, 2010    

OECD warns Governments about spiralling debt

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by Kay Murchie

The Organisation for Economic Co-operation and Development (OECD) today warned Governments in its member countries to take action to trim their budget deficits.

The OECD, which includes 30 territories such as the US, Australia, Japan, Canada, New Zealand and European countries, is forecasting that debt would exceed 100% of GDP in 2011 across its member countries.

Its warning comes prior to the European Union summit, due to take place later this week, in which Greece’s debt crisis is set to be the main topic of discussion.

In a report prepared for the G20 group of developed and emerging economies, the OECD warned: “Without significant action, debt levels would continue to rise in the medium term from already high levels in a number of countries, including Japan, United States and United Kingdom.”

It is therefore urging Governments to start their exit strategies.

“Consistent with ongoing fiscal support and the cyclical downturn, budget deficits are expected to reach historical highs in 2010 in several countries,” it said.

“Because there are lags in the budget process, consolidation strategies and plans will need to be decided by mid-2010 if they are to be implemented in 2011 budgets”.

Last week, the European Commission revealed the British Government’s plans for reducing the budget deficit are not ambitious enough.

The document warned Britain is not on target to trim its deficit in accordance with EU rules of below 3% of economic output by 2014-15.

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