Led by firm US growth, the outlook is gradually improving for advanced economies while even crisis-weary Europe is at last joining the recovery, according to the OECD.

The global economy is beginning to rebound, but Europe is lagging behind and unemployment rates, even in countries starting to see growth, are still too high, a leading international economic body says.

The 17-country eurozone risks falling into a “severe recession”, the Organisation for Economic Co-operation and Development warned today, as it called on governments and Europe’s Central Bank to act quickly to stop the slowdown spilling over into the global economy.

THE OECD (Organisation for Economic Cooperation and Development) said EU states should loosen labour laws and adjust tax systems to bolster the recovery from this severe economic slump.

A EUROPEAN Central Bank interest rate increase may “put a lid” on consumer spending in Ireland and Portugal and other peripheral euro area countries, said Carsten Brzeski, an economist at ING Group.

RECOVERY in the global economy is slowing faster than expected, dragged down by weaker performances in the world’s seven biggest economies.