Calls to 'rein in debt' as slow recovery predicted

The Organisation for Economic Cooperation and Development (OECD) has called for comprehensive plans to rein in debt, as it warns that the UK's economic recovery is likely to be slow.

The annual report from the OECD suggests that unemployment will rise to around 10% next year, together with a 90% rise in debt as a proportion of national output.

The organisation is urging the Government to improve productivity in the public sector, and to introduce further measures to enable unemployed workers to retrain.

Key measures recommended by the OECD include:

• Reducing high debt levels with explicit, targeted programmes to cut expenditure and temporary measures to raise revenue
• The introduction of new rules to replace the suspended 'golden rules' regarding balancing the budget over the economic cycle
• The possible introduction of an independent fiscal body, to assess Government spending

Meanwhile, responding to the current conflict between the Bank of England and the Financial Services Authority regarding financial sector reform, the organisation has suggested that issues could be resolved with the creation of a joint board, with the final authority to take action.