PARIS (AFP) - Eurozone growth is set for 1.7 percent, rising to 2.0 percent in 2012 the OECD said, warning that interest rates should then rise. The eurozone, hit by its second crisis in six months, should also beef up budget rules and could make a temporary bailout fund permanent, the OECD said alluding to market scepticism about the framework of the single currency. A short time later in Frankfurt, the head of the European Central Bank Jean-Claude Trichet expressed grave concerns about economic governance in the eurozone. The OECD warned in its report in general that low interest rates and high national debts are unsustainable, and specifically regarding the eurozone it said that the the Stability and Growth Pact should have more bite to enforce budget discipline among the 16 member countries. The Organisation for Economic Cooperation and Development said in its twice-yearly Economic Outlook report that it expected the eurozone to manage 1.7-percent growth this year and the next, picking up to 2.0 percent in 2012. While noting that a gradual economic recovery is underway, driving both strong exports and a rise and consumption and investment, the OECD warned that the pace of recovery is likely to be muted as govts rein in deficits and stimulus measures. Moreover, the OECD said that all eurozone governments should step up budget tightening in 2011, even though this dampens growth, and that measures had to be taken to reassure markets that huge deficits will be eliminated. Detailed medium-term consolidation plans should be set out in all euro area countries to increase the credibility fo the consolidation process, the OECD urged. The commitment to consolidation would be further enhanced by reforms to strengthen market discipline, the Stability and Growth Pact, and national fiscal institutions. In particular, it warned that interest rates, which have been kept at historically low levels in order to boost activity during the crisis, need to start coming up after next year, giving governments little time to underpin economic recovery. The main refinancing rate should gradually be increased from the early part of 2012, unless higher than expected inflationary pressures emerge, said the OECD report. While monetary stimulus measures should largely remain in place next year, the OECD said non-standard measures should continue to be wound down as conditions allow. This is likely a reference to measures by the European Central Bank granting banks easy access to cash, with the growing dependency of Irish banks on this facility fuelling fears that Ireland will need outside help despite a bailout that removed toxic property loans from their balance sheets. The OECD also urged the eurozone make permanent the 440-billion-euro (600-billion-dollar) rescue fund created in the wake of the 110-billion-euro bailout of Greece in May to calm markets. In addition to reducing the risk of crises, it is well recognised that an institutional framework is required to resolve crisis that may occur, said the OECD. It said arrangement along the lines of the three-year European Financial Stability Fund (EFSF), could be made a permanent feature of the euro area financial architecture thereby filling an important gap... The OECD forecast Germany to recover to its pre-crisis level of gross domestic product next year, although the pace of its strong growth is expected to slow. It predicts the German economy will grow 3.5 percent this year, followed by 2.5 percent in 2011 and 2.2 percent in 2012. By contrast, Frances slow economic recovery is expected to pick up pace from 1.6 percent in this year and 2011 to 2.0 percent in 2012. However the OECD urged Paris to reform health care and public administration, increase taxes as well as put in place to ensure its fiscal policy is credible. For Britain, which is not part of the eurozone, the OECD said the conservative governments ambitious budget cutting plan has significantly reduced fiscal risk and could ... support growth in longer term. While saying the risks are on the downside, the OECD forecast Britain will manage 1.8 percent growth this year, dipping to 1.7 percent in 2011 before recovering to 2.0 percent in 2012.