The Organization for Economic Cooperation and Development saidEurope's debt crisis risks spiraling and seriously damaging theworld economy.

“The risk is increasing of a vicious circle, involving high andrising sovereign indebtedness, weak banking systems, excessivefiscal consolidation and lower growth,” OECD Chief Economist PierCarlo Padoan wrote in the organization's semi-annual report on theglobal economy. Such a downside scenario “may materialize and spillover outside the euro area with very serious consequences for theglobal economy,” he said.

The remarks amount to a warning to European Union leaders whoare preparing to gather in Brussels tomorrow to discuss how torevive growth and grapple with a political impasse in Greece, wherevoters rejected austerity measures in elections on May 6. The eurohas dropped more than 3 percent this month on concern that Greecemay opt to leave the 17-nation monetary union.

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