Easing up on austerity and collectively spending more on infrastructure projects is the request from the OECD to its rich country members to boost waning growth.
The Organisation for Economic Cooperation and Development expressed concern about the global economy and warned that deficit-reduction schemes on their own are not enough in the fight for recovery.
Cutting its growth forecast made three months ago the OECD urged countries to take a more balanced approach.
In the past the OECD has supported the UK government’s austerity measures but believes now is the time for Britain to join other countries in spending more on public investment.
In delivering the OECD’s interim economic outlook, the organisation’s chief economist Catherine Mann (pictured) said: “Given the significant downside risks posed by financial sector volatility and emerging market debt, a stronger collective policy approach is urgently needed, focusing on a greater use of fiscal and pro-growth structural policies, to strengthen growth and reduce financial risks.
“With governments in many countries currently able to borrow for long periods at very low interest rates, there is room for fiscal expansion to strengthen demand in a manner consistent with fiscal sustainability.”
By taking advantage of cheap borrowing to spend more on infrastructure projects will be a boost to the sector.
Spending more on infrastructure projects has a high multiplier effect, as the OECD believes this will in turn have a strong impact on overall growth rates.
Catherine Mann went on to say that quality infrastructure would bolster future growth and make up for “the shortfall in investment following the cuts imposed across advanced countries in recent years.”