IMF chief urges collective action to prevent another global slump

 

Washington

The head of the International Monetary Fund yesterday warned world leaders that they are running out of time to prevent another global slump and urged them to rediscover a "collective momentum" in order to head off disaster.

Speaking in advance of the opening of the IMF's annual conference in Washington, Christine Lagarde repeated warnings from her officials earlier in the week that the international economy is entering a "dangerous phase". She also drew a contrast with the situation in the wake of the last financial crisis in 2009, cautioning that "the path for recovery is narrower than it was three years ago".

Speaking against a backdrop of plummeting global stock markets, Ms Lagarde said global policy should not be driven by investor panic. The IMF's prescriptions, she said, "will not be dictated by the day-to-day variation of the Dow Jones, the Nasdaq, the Cac or the Dax".

She also asserted that investors in sovereign bonds were not giving nations enough credit for the efforts they have made to get their public finances under control. Referring to the eurozone, she said: "There are countries that have taken very bold measures to address their deficit situation. That goes very much under the radar screen... We are seeing very good things coming out of that zone [that] are not very much not recognised by the markets."

But Ms Lagarde did insist that European governments must act swiftly to recapitalise their banks, saying "three years down the road [from the last crisis] we are still not advanced as we should be in terms of financial reform. This is fuelling a lack of confidence. There has been huge progress, but more needs to be done". This week the IMF identified a potential €200bn (£176bn) hole in the European banking sector.

Asked about the slow response of European policymakers to the sovereign debt crisis, Ms Lagarde stressed the importance of national parliaments throughout Europe ratifying the emergency measures taken by national leaders in July. "We are no longer in Napoleonic times when a leader could snap his fingers and make something happen," she said.

Ms Lagarde also emphasised that the response of Europe to the crisis had significant political implications. She said: "It is not only about economics, about finance, it is also about political, collective destiny from countries that have spent centuries fighting each other and are determined to stay together." She did, however, stress that "time is of the essence... All our members... need to address the current crisis together. It is about taking politics to its highest level".

Ms Lagarde's warnings were echoed yesterday by the head of the World Bank, Robert Zoellick, who said that financial turmoil in the developed world was putting poorer countries at risk. Also speaking in Washington, he said: "Europe, Japan, and the United States must act to address their big economic problems before they become bigger problems for the rest of the world."

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?