‘Risks of a global freezing of markets are very real’

Five years after the credit crisis began, Western economies are confronting the prospect of a lost decade of growth, and international diplomats are warning the damage could get even worse if Europe allows its sovereign debt crisis to fester much longer.

International Monetary Fund chief Christine Lagarde is heading to Berlin today to urge action after the IMF called for member states to provide €388bn for new loans to help troubled countries.

G20 officials say Europe must double the size of its rescue fund to $1 trillion as a crucial step to stabilise financial markets and prevent the euro-zone crisis from spreading. Europe finance ministers meet on their debt plan on Tuesday.