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IMF chief quotes Churchill as she warns of global chaos

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The head of the International Monetary Fund has urged countries to cut debt and slash red tape to revive growth as she warned the world was becoming more vulnerable to economic shocks.

Kristalina Georgieva invoked wartime prime minister Sir Winston Churchill as she urged governments to prepare for the next global crisis.

“There is plenty to worry about,” she told reporters at the IMF Spring Meetings in Washington.

It came as Megan Greene, a policymaker at the Bank of England, warned that Threadneedle Street risks plunging the UK back into recession if it cuts interest rates too soon.

Ms Greene, who echoed comments earlier in the week by the IMF, said a “stop-start” approach to setting interest rates “doesn’t tend to end well”.

The IMF said “backpedaling” on rates would potentially be more damaging for financial markets and the wider economy.

Ms Greene added that interest rates in the UK were likely to remain at 5.25pc “for a while”.

She said: “Do I think it’s worse to do too much or too little [on interest rates]?

“I think doing too little is the bigger risk because you end up having to hike rates even higher and could end up triggering an even bigger recession.”

Ms Georgieva urged countries to rebuild their rainy day funds and get debt down as she warned that the medium term prospects for global growth were at their lowest in decades.

She said: “In a world where crises keep coming, countries must urgently build fiscal resilience.”

She added: “In a world of more frequent shocks, we know we will be tested again.”

Quoting Churchill, she added: “This is no time for ease and comfort. It is time to dare and endure.”

Churchill made the comment in a speech in 1940 during the Second World War.

Ms Georgieva warned that global debt levels were far higher than before the pandemic and compared the trajectory of global growth to a “Swiss ski slope” with prospects dimming every year.

Ms Georgieva said countries should do more to boost growth, including “foundational reforms, strengthening governance, cutting red tape, increasing female labour market participation, and improving access to capital. They’re all essential for growth and even more so, our productivity.”

Speaking at the Atlantic Council in Washington, Ms Greene said she believed inflation risked proving “more persistent” in the UK than other rich economies.

UK inflation fell to 3.2pc in March, and Andrew Bailey, the Bank of England Governor, has said he expects a “strong drop” next month.

However, Ms Greene said UK wage growth of between 6pc to 7pc and strong services-inflation, which remains at 6pc, was still too high.

“The numbers we’re seeing in terms of wage growth and services inflation just aren’t consistent with a sustainable 2pc inflation target, which we’re trying to hit.” 

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