The managing director of the International Monetary Fund has warned that the global economy faces the prospect of “economic retraction, rising protectionism, isolation and . . . what happened in the 30s [Depression]”, as European tensions again flared over suggestions in Paris that the UK’s credit rating should be downgraded before France’s.
“There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating,” Christine Lagarde said in a speech at the US state department in Washington. “It is not a crisis that will be resolved by one group of countries taking action. It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action.She was speaking after the governor of France’s central bank, in an attack on the “incomprehensible and irrational nature” of credit rating agencies, also angered London officials by suggesting the agencies should target the UK’s rating rather than France’s.