Stephanie Gruner Buckley

The world economy is “far from being out of the woods,” according to the latest report from the Organisation for Economic Co-operation and Development (OECD). The bi-annual economic outlook paints an alarming picture of the slow global recovery and the drag that the euro zone crisis, in particular, is having on the rest of the world. New forecasts from the Paris-based think tank suggest that the euro zone will contract for two more years, with a contraction of 0.4% this year and 0.1% in 2013.

European officials have finally reached agreement on a gentler debt-reduction plan for Greece. The marathon meeting into this morning between the euro zone’s 17 finance ministers, leaders of the International Monetary Fund (IMF), and the European Central Bank (ECB), resulted in a deal to reduce Greek debt by €40 billion ($51.9 billion). It also unlocked up to €44 billion in bailout aid that’s been on hold since June.

As European leaders bicker today over how to help Greece get back on its feet, one report says Greece and other troubled euro-zone countries are at least doing something right. The Lisbon Council and Berenberg Bank said in a study (pdf) just out that euro-zone countries hardest hit by the crisis were shaping up the fastest by aggressively slashing fiscal deficits and improving competitiveness. The current recession has obscured their progress, but if they can get through the financial crisis—which for some of them, is a big if—they’ll be in good shape.

Bloomberg reported today that bond and currency investors remain keen on Scandinavia, despite contractions in the economies of Denmark and Finland, and stalled growth in Sweden. Analysts Bloomberg interviewed said investors weren’t enamored of the Nordics—it’s just that major markets elsewhere, like the US, Japan, and some euro zone countries, looked worse.

Good morning Quartz readers!

If the delegates at this week’s Doha climate confab want to see why their meeting is so important, they won’t have to look very far. In Doha, Qatar, host of the 18th UN Climate Change Conference, the effects of climate change are already keenly felt.

Negotiations on the European Union’s budget are over, on the second day of the EU summit in Brussels. Media reports say that leaders of wealthier countries felt the proposed seven-year spending plan for the 27 member states wasn’t austere enough. It seemed the meeting had barely gotten underway before the news broke that they were done.

Good news from Germany today: German confidence regarding industry and trade rose unexpectedly, after six months of souring sentiment. Business people surveyed in the Ifo Business Climate Index were far less pessimistic about their future business prospects, supporting a view that the German economy is holding up relatively well during the euro zone crisis.

A first day of European Union (EU) budget talks wrapped up at midnight in Brussels after concessions were made all around. Herman van Rompuy, the European Council president, revised his draft seven-year spending plan by adding back €11 billion ($14 billion) in “cohesion funds” designed to help countries economically lagging like Poland and Portugal, and another €7.7 billion back into farm subsidies to appease countries like France and Italy.

Two major organizations released climate change reports this month warning of doom and gloom if we stick to our current course and fail to take more aggressive measures. A World Bank report imagines a world 4 degrees warmer, the temperature predicted by century’s end barring changes, and says it aims to shock people into action by sharing devastating scenarios of flood, famine, drought and cyclones. Meanwhile, a report from the US National Research Council, commissioned by the US Central Intelligence Agency (CIA) and other intelligence agencies, says the consequences of climate change—rising sea levels, severe flooding, droughts, fires, and insect infestations—pose threats greater than those from terrorism ranging from massive food shortages to a rise in armed conflicts.

Former French President Nicolas Sarkozy goes to court today in Bordeaux to answer questions on whether he “abused the feebleness” of the country’s wealthiest woman, L’Oréal cosmetics heiress, Liliane Bettencourt, when he allegedly received illegal funding for his 2007 presidential campaign. Although the French press has made much of Sarkozy being in court—some say fueled by Leftist opponents—the litigation today is not really about Sarkozy.

Greek leaders have been jumping through hoops for weeks to meet international lenders’ demands, but now it’s Europe’s leaders who can’t get it together to agree on the country’s debt deal. Nearly 12 hours of talks into this morning by euro zone finance ministers, leaders of the International Monetary Fund and the European Central Bank failed to produce a consensus on how to resolve Greece’s debt problem. The failure to reach an accord means emergency aid to the soon-to-be broke country can’t be released.

Earlier this month the BBC alleged on a news program that a former Tory politician was a child molester. The report, which didn’t actually name the man, was untrue. But a frenzy of speculation began on Twitter, with thousands of people either tweeting or retweeting the name of Alistair McAlpine—a.k.a. Lord McAlpine, an adviser to Margaret Thatcher when she was prime minister. The BBC has since apologized for sloppy reporting and coughed up £185,000 ($294,000) in damages. But some of those who tweeted about it are facing a probable lawsuit.

Moody’s rating agency yesterday downgraded France’s government bond rating to Aa1 from Aaa, while maintaining a negative outlook. The news was largely expected following a similar move by Standard and Poor’s in January and an announcement by Moody’s in February that it would assess France given the uncertainties in the euro zone.

Jerry Storch, chief executive of Toys R Us, told the Financial Times that shoppers should consider the environmental impact when buying online. He said (paywall):

The UK’s Observer posted the results of a poll over the weekend showing that 56% of Brits favored quitting the European Union (EU), while 30% said they would stay put, and 14% didn’t know. The results were further broken down by party.

A new report (pdf) shows what we already knew, but would prefer not to think about: health care spending is falling across Europe at a time when Europeans really could use the money. It’s the first time since 1975 that overall health care spending has fallen across the 27 European Union (EU) countries, according to a new report from the OECD and the European Commission. In 2010, health spending per capita fell -0.6% as cash-strapped governments struggled to balance budgets. This compares to an average growth rate on per capital health care spending of 4.6% between 2000 and 2009. On average, EU countries spent 9.0% of GDP on healthcare in 2010, an increase over 7.3% spent in 2000, but down from 9.2% in 2009.

Recent research proves what protestors have been saying all along: harsh austerity measures are bad. What’s more, it’s not just bad for people, but for economies too: for debt-reduction, growth, and the long-term job prospects of young people in particular.

Superbugs are spreading at an alarming rate in Europe as antibiotics used to fight even common infections are growing increasingly ineffective though widespread overuse and misuse.

Attention is shifting from Greece to France as the most troubled euro-zone country. Last week, the International Monetary Fund warned that without urgent economic reform, the country risked falling behind Italy and Spain. On the same day, industrialist Louis Gallois called for “shock” measures to jump-start French industry, in a report commissioned by the government. He says the nation’s industrial sector is shrinking faster as a percentage of GDP than in many other euro-zone countries. Meanwhile, other French business leaders have been taking their complaints to the press, saying that France’s economy is losing ground not just to Germany, but to the UK, Spain, and Italy as well. Today’s better-than-expected economic growth figures (0.2% growth for this quarter compared to last) gave French finance minister Pierre Moscovici a chance to answer critics (paywall):

The eurozone fell back into recession today for the second time since 2009. GDP for the 17-country bloc contracted by 0.1% in the latest quarter, following a 0.2% decline in the previous quarter, according to numbers from Eurostat. The news was generally expected, as euro zone countries struggle to slash spending to get debt in check.

Britain’s chancellor of the exchequer, George Osborne, was served notice late Wednesday that Britain could lose its Aaa debt rating if the country’s economic situation worsens. The annual update (find it here) from Moody’s rating agency said that a lack of growth has hurt the UK’s ability to handle further “fiscal or economic shocks”, and that the ongoing euro zone crisis would likely hit revenue growth and undermine the country’s efforts to reduce debt.

Industrial production fell 2.5% in the euro area (17 countries) and 2.3% across the European Union (27 countries) in September from August—the biggest fall in more than three years. The picture, according to numbers from Eurostat, is just as bleak when looking at figures compared to a year ago with industrial production down 2.3% in the euro zone, and down 2.7% for the European Union (EU).

Workers across the euro zone are staging mass protests today, Nov. 14, in public demonstrations that could stretch from Portugal to Turkey. The “European Day of Action and Solidarity”, supported by the European Trade Union Confederation (ETUC), could involve as many as 40 trade member groups from 23 countries.