US, Europe risk another recession, report warns
msnbc.com staff and news service reports
7:30 AM EST November 28, 2011
The United States and others must "be prepared to face the worst" as Europe slides toward another recession, according to a gloomy warning from the Organization for Economic Cooperation and Development.
Failure by EU leaders to stem the debt crisis that has spread from Greece to much-bigger Italy "could massively escalate economic disruption" and end in "highly devastating outcomes," the Paris-based OECD said in its latest bi-annual economic forecast on Monday.
Improved global prospects would also depend on the enactment of a credible medium-term fiscal program in the United States, it said.
"The global economy is not out of the woods," the report said.
It added that even the U.S. was at risk of returning to recession if "no action [was] agreed to offset the large degree of fiscal tightening implied by current law."
"This could tip the economy into a recession that monetary policy could do little to counter," it said.
It predicted Britain will slip back into a modest recession early next year, threatening to derail deep austerity measures there.
It also recommended an urgent boost top the EU bailout fund and called on Europe's central bank to do more to stem the crisis.
Global gloom
The OECD report was the latest in a series of increasingly gloomy forecasts, and comes as China's economy is slowing and Japan's exports are tumbling.
Eastern European countries are wobbling as credit dries up from a pullback in lending by eurozone banks.
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