Lagarde sounds warning on EU prospects

The head of the International Monetary Fund yesterday warned that financial markets were "perhaps too upbeat" on Europe because high unemployment and high debt across the continent could drag down investment and hurt future growth prospects.

IMF chief Christine Lagarde urged the European Central Bank to keep an accommodative monetary policy until private demand had fully recovered and called on EU countries to tackle structural road blocks that hurt job creation and productivity.

Just days after the IMF warned in a regular report on the eurozone that any new shocks could halt the bloc’s economic recovery, Ms Lagarde hammered the message home at a conference in Paris, saying: “The good news is that the European economy is recovering from the crisis. Confidence is improving and financial markets are upbeat. Perhaps too upbeat.”