The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe's deepening debt crisis, the head of the International Monetary Fund has warned.
On a day that saw an escalation in the tit-for-tat trade battle betweenChina and the United States and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of "retraction, rising protectionism, isolation".
She added: "This is exactly the description of what happened in the '30s and what followed is not something we are looking forward to."
The IMF managing director's call came amid growing concern that 2012 will see Europe slide into a double-dip recession, with knock-on effects for the rest of the global economy. "The world economic outlook at the moment is not particularly rosy. It is quite gloomy," she said. » | Larry Elliott, Heather Stewart and Nicholas Watt | Thursday, December 15, 2011
To call what happened in the 1930s a “slump” is a bit of a stretch and a misnomer, to say the least. The 1930s was characterized by a 'full-on' depression. The terms “slump” and “double-dip” are far too mild to describe the dire economic situation experienced during that period in history. The IMF and these politicians need to get their facts straight. – © Mark
