Tuesday

21st Feb 2017

IMF chief: 2013 is make-or-break year for eurozone

  • 'We have to tackle inequality in our societies and promote women,' Lagarde said (Photo: World Economic Forum)

International Monetary Fund (IMF) chief Christine Lagarde has said that eurozone leaders should "keep the momentum" of reforms like the banking union, as recession is now forecast to linger on in 2013.

"2013 will be a make or break year. The biggest risks are in the developed countries - Japan, the eurozone and the US, there are threats if they don't keep up the momentum," Lagarde said on Wednesday (23 January) during her speech at the World Economic Forum in the Swiss resort of Davos.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Earlier that day, the IMF revised its global growth forecast, giving a more pessimistic outlook than three months ago: instead of a 0.1 percent increase in the eurozone this year, the Washington-based lending body now predicts a recession of 0.2 percent.

Lagarde said it was important for the eurozone to have a functional banking union in place as soon as possible, in reference to current negotiations on setting up a single supervisor for banks, to be hosted by the European Central Bank.

"Fiscal consolidation, however painful it may be in some areas of the eurozone, must continue, as well as a clear focus on jobs," Lagarde said.

She repeated what top economists at the IMF admitted in a study earlier this month - that "policy makers did not pay enough attention to inequality" and focused too much on spending cuts at the expense of the most vulnerable in the society.

"What is less clear is how to achieve that inclusive growth. Minimum wages can also work sometimes, but if there is any priority, it should be youth employment," she said.

Over half of young people in Greece and Spain are out of a job, as national economies continue to shrink, the fourth year of recession for Greece and the second for Spain.

Lagarde, a former French finance minister under whose leadership the IMF has become more sympathetic to social woes, criticised the vested interests and corrupt networks in the financial sector, saying they were at the root of the 2008 financial crisis.

"Too much activity was hidden away in shadowy corners. Things have changed, but we need further and better changes in 2013, to finish up the financial sector reform, for instance on shadow banking and derivatives," she noted.

The EU is struggling to strengthen rules for the financial sector, but critics say the new laws have been watered down by lobbying from banks and investment funds.

EU ready to challenge US border tax

The EU is willing to fight any attempt by the Trump administration to impose border tax on imports, says trade commissioner Jyrki Katainen.

MEPs approve Canada trade deal amid protest

Amid protests in front of the European Parliament's Strasbourg building and after heated debate among MEPs, the landmark trade deal with Canada was approved with a comfortable majority.

News in Brief

  1. Romanian parliament buries controversial corruption decree
  2. Dozens drown off Libyan coast
  3. EU ministers approve anti-tax avoidance directive
  4. Poland rejects EU criticism of court changes
  5. German nationalist leader met with Putin allies in Moscow
  6. German housing market overheated, says Bundesbank
  7. France invites three EU leaders for Versailles summit in March
  8. Greece agrees on new bailout reforms

Stakeholders' Highlights

  1. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  2. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  3. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  4. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  5. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  6. Centre Maurits CoppietersMinorities and Migrations
  7. Salzburg Global SeminarThe Child in the City: Health, Parks and Play
  8. UNICEFNumber of Ukrainian Children Needing Aid Nearly Doubles to 1 Million Over the Past Year
  9. Centre Maurits CoppietersThe Situation of Refugee Women in Europe
  10. Salzburg Global SeminarToward a Shared Culture of Health: Charting the Patient-Clinician Relationship
  11. European Free AllianceAustria Should Preserve & Promote Bilingual and Multinational Carinthia
  12. Martens CentreShow Your Love for Democracy! Take Part in Our Contest: "If It's Broken, Let's Fix It"

Latest News

  1. Should Europeans spend more on defence?
  2. Dieselgate: EU disappointed with VW's treatment of customers
  3. French police raid Le Pen's party office
  4. The Armenia-Azerbaijan war: A refugee's story
  5. Greece and creditors break bailout deadlock
  6. Internal EU report exposes Libya turmoil
  7. EU commissioner condemns 'delay' in post-Dieselgate reform
  8. Sweden fights back as foreign leaders make up bad news