In a survey on the 12 nations sharing the single European currency in 2006 -- Slovenia became the 13th member this week -- the OECD said structural rigidities were holding back growth and encouraging inflation.

"After several false starts, the economic recovery has taken hold," said the OECD, a policy research body for 30 leading industrialised countries based in Paris.

"If in addition structural reforms continue, the expansion will become durable and self-sustaining, a prospect also supported by sound corporate and household balance sheets and favourable financing conditions," it said.

The organisation tempered any optimism by warning that annual economic growth in 2007 and 2008 was only projected at around a modest 2.25 percent.