The OECD has cut its 2007 growth forecasts for the US and the Eurozone. The GDP forecasts for the G7 have been downwardly revised, because of weakening confidence. This follows the subprime mortgage crisis. The OECD says this shows there should be more regulation in the housing market.

OECD chief economist Jean Philippe Cotis said the market upheaval occurred at a time when world economic momentum was strong. That means that downward revisions to the growth forecasts so far are modest. The growth forecast for the US is now cut from 2.1percent to 1.9 percent.

The Eurozone is also projected slightly lower, having lost point one of a percent. But the forecast for Japan remains stable at 2.4 percent. For the UK though, there was good news as the forecast growth was up from 2.7 percent, to 3.1 percent. The OECD said the European central Bank should still be looking to raise interest rates, currently 4 percent, to counter inflation. Confidence is not expected to return till the banks give their next results in October.

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