The head of the International Monetary Fund warned of “pain” ahead for the UK as it left the European Union and claimed Britain was unlikely to secure arrangements as good as its current membership.
She also stood by the IMF’s recent decision to downgrade its British growth forecast for next year, to 1.4 per cent, although it upgraded it to 1.5 per cent for 2017 after the UK economy performed much better after last June’s Brexit vote than people like her had predicted.
During last year’s referendum campaign she was a willing participant in then Chancellor George Osborne’s bid to scare voters out of backing Brexit and she summed up the likely economic consequences of a vote to leave as wholly negative, ranging from “pretty bad to very, very bad”.
Christine Lagarde warned of ‘pain’ ahead for the UK as it left the European Union
Conservative pro-Brexit Member of the European Parliament Dan Hannan said: “The people who told us it would be a disaster to keep the pound, that a Leave vote would trigger an immediate recession, that noone would sign a trade deal with us after Brexit, are now trotting out the same dreary line about Brexit.
We are still of the view that it will not be positive all along and without pain
Christine Lagarde – Head of the IMF
“How many times do the IMF’s forecasts need to be wrong before people stop listening?”
It also emerged that former British ambassador to the EU Lord Kerr of Kinlochard, who co-drafted the Article 50 legal framework for an EU member state to leave, expects Brexit talks between the UK and its Continental partners to be “very nasty” with a high risk of failure.
Lagarde stood by IMF’s decision to downgrade its British growth forecast for next year, to 1.4%
May's Brexit speech: Europe reacts
Tue, January 17, 2017
Politicians and celebrities tweet their reaction as Theresa May unveils her 12 point plan for Britain leaving the EU.
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The British Prime Minister Delivers Her Brexit Speech
UK Independence Party MP Douglas Carswell said: “Both Lord Kerr and Madame Lagarde didn’t want us to vote Leave.
“They think we should have listened to experts like them.
“Lord Kerr was Britain’s chief eurocrat in Brussels and she’s in charge of the IMF.
“But fortunately in a democracy we don’t have to doff our caps to these people.
“We have had enough of these sorts of people setting the political agenda. We voted Brexit to free ourselves from them.
“Anyway, if the IMF was given performance-related pay packets they should be on below the minimum wage. That would focus her mind a little bit.”
‘We voted Brexit to free ourselves from them’, says Ukip MP Douglas Carswell
Mrs Lagarde, who is paid a six-figure tax-free salary to head the US-based IMF, was in the Swiss resort of Davos at the World Economic Forum where some of the world’s richest and most powerful people meet each year.
She told the BBC that the “extraordinary” response by the Bank of England to steady the economy after the shock referendum result and the “quite remarkable” behaviour of British consumers continuing to spend despite uncertainty had helped the economy defy the gloomy forecasts, including her own organisation’s.
But she added: “Once uncertainty clears, if people feel that their ability to set up shop in the UK and operate throughout the geographical area that is the EU is not working as well as it did, the investment decision will change.
“In the same vein, if exports are subject to significant tariffs, restrictions and so on and so forth, the ability of the UK to activate that trade engine is going to be reduced.
“So while we have upgraded our forecasts for 2017, we have downgraded for 2018 … We are still of the view that it will not be positive all along and without pain.”
She also suggested Britain’s Brexit terms could only be inferior to EU membership.
“When you belong to a club, whatever that is, the members of the club have a degree of affinity and particular terms under which they operate,” she said.
Theresa May set out plans for a clean break Brexit for when she invokes Article 50 in March
Somebody outside the club “has different access … and if being part of a club is optimising and leveraging your membership, it (leaving) would not be as good”.
She welcomed Theresa May’s speech on Tuesday setting out her 12-point wishlist for the Brexit talks as providing more clarity although there were still “question marks” over key aspects.
Mrs Lagarde remains IMF managing director despite being convicted last month in a French court but not punished for “negligence” with public money.
As French finance minister nearly a decade ago she approved and did not challenge a dispute resolution which saw taxpayers hand some £300million to a controversial businessman to settle his long-running dispute with the state. She denied wrongdoing.
Lord Kerr, in a lecture in Glasgow, warned Britain faced tough EU “divorce” talks with a high chance of failure.
“Article 50 is not about trade, it is about divorce,” he said.
“It’s about paying the bills, dividing the property.
“The money negotiation is going to be a very nasty negotiation.”
Theresa May's 12 point Brexit plan
Mon, January 16, 2017
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Continued cooperation with the EU to tackle terrorism and international crime.
Theresa May, who this week set out plans for a clean break Brexit, vows to trigger up to two years of formal talks when she invokes Article 50 of the Lisbon Treaty by the end of March.
Lord Kerr said he did not expect any “serious negotiations” before the autumn and that 2017 would be “mainly spent in a furious battle about money”.
The chances of the UK having to leave without a deal because none could be reached were “as much as 25 per cent or maybe more. I think there may actually be a one-in-three chance of no deal”, he added.