German chancellor Angela Merkel will travel to Paris this evening to discuss the result of the Greek referendum with French president Francois Hollande, a German government spokesman said yesterday.

Italy will settle the debt arrears it owes to private sector suppliers by the end of this year, economy minister Pier Carlo Padoan said in a newspaper interview yesterday, pushing back previous commitments.

The EU, supported by Germany, is working to meet an Italian demand to shift focus from austerity towards growth in a deal that could help cement Jean-Claude Juncker as the next European Commission president.

The OECD has cut its global growth expectations again and warned that the eurozone faced not just internal challenges but also risks from the US and emerging market economies.

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.

Britain is on the brink of a modest recession that will be followed by months of stunted growth, a bleak forecast from the OECD said today.

ITALY’S second austerity package in less than a month was met with a chorus of criticism a day after becoming law, with the largest union threatening a general strike over the “injustice” of the measures.

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.