News Flash from IMF - global economy is in deep trouble; urges EU to "get its act together".

By Business editor Peter Ryan

The International Monetary Fund has urged Europe to "get its act together" and deal with the deepening sovereign debt crisis.

The IMF warned the US and Europe could slide back into recession and said the global economy has entered a "dangerous new phase".

Here's my analysis broadcast on "The World Today".

The Fund's chief economist Olivier Blanchard said European leaders had been one step behind panicked financial markets, adding to criticisms that EU leaders have been divided in the face of a ticking debt bomb.

"We are very explicit in our messages, both in the EU and elsewhere, in saying that Europe must get its act together and it is absolutely essential that they do what's needed. It is indeed a major source of worry. So you can see us as indeed issuing a call to arms," Mr Blanchard told reporters in Washington.

Mr Blanchard singled out Europe as "a major source of worry"  as he released the IMF's latest World Economic Outlook report.