OECD warns on eurozone ahead of G20

European countries need to do more to rid their banking systems of bad debts, a leading economic body warned yesterday, ahead of the G20 summit later this week.<br /><br />The Organisation for Economic Co-operation and Development (OECD) said in its annual survey of the European Union that the economies of many nations would continue to suffer until they release sufficient funds to recapitalise their banks.<br /><br />&ldquo;In many EU countries, uncertainties remain regarding the extent of the impaired assets problems on banks&rsquo; balance sheets and concerns persist that banks may be insufficiently capitalised to deal with a further deterioration in economic conditions. This will need to be addressed,&rdquo; the OECD report said.<br /><br />With the Group of 20 leaders set to meet in Pittsburgh on Thursday and Friday, the OECD called for accelerated reforms to improve financial regulation and supervision to ensure long-term growth after the worst recession in half a century.<br /><br />The report added that steps should be made to strengthen innovation, deepen the single market and move to a low carbon economy, while pushing for global trade liberalisation.<br /><br />Prime Minister Gordon Brown is due to set out his proposals for boosting Chinese consumer demand at the Pittsburgh summit, with the aim of ending the nation&rsquo;s dependence on the US and boosting global balance.<br /><br />Meanwhile, a document outlining the US position ahead of the meeting emphasised the need for cooperation to rebalance world growth.<br /><br />&ldquo;The world will face anaemic growth if adjustments in one part of the global economy are not matched by offsetting adjustments in other parts,&rdquo; it said.<br /><br />As part of this cooperation, the G20, rather than the G8, is expected to become the defacto arena in which to thrash out global economic problems.