Christine Lagarde predicted that the UK’s European divorce would be a long and complicated process, while shamelessly admitting that Britain’s economy had performed above IMF predictions.
Her message comes after Malta’s Prime Minister Joseph Muscat said a post-Brexit trade deal between Britain and the EU must be inferior to full membership of the bloc.
Speaking at the European Parliament on Wednesday, he said: “We want a fair deal for the United Kingdom, but that deal necessarily needs to be inferior to membership.
“This should not come as a surprise to anyone. Indeed, thinking it can be otherwise would indicate a detachment from reality.”
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IMF chief Christine Lagarde hinted at UK economic pain post-Brexit
We are still of the view that it will not be positive all along and without pain
Christine Lagarde
Speaking to BBC Newsnight, from the World Economic Forum in Davos, Switzerland, Ms Lagarde said: “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.
“Somebody outside the club has a different access, and I think he is referring to that.”
Responding to a direct question about Britain being given a less than satisfactory trade deal by Brussels, the IMF chief added: “It would certainly be different.
“If being part of a club is optimising and leveraging your membership [leaving the club] would not be as good, yes.”
Ms Lagarde was recently accused of negligence over a £335m (€400m) payment made to a French tycoon while she was the country’s finance minister.
The French court found her guilty, but she avoided a prison sentence after it was decided she should not be punished and that the conviction would not constitute a criminal record.
Before the referendum result, Ms Lagarde and her organisation said a vote to leave the EU would have consequences ranging from “quite bad to very, very bad”, but the IMF has since admitted that it had been too pessimistic.
Her close relationship with former Chancellor George Osborne saw her make a series of interventions on behalf of the Remain campaign and 'Project Fear'.
Earlier this week the IMF upgraded Britain’s growth forecast for 2017, but continued to insist the country will experience a downturn the following year.
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Continued cooperation with the EU to tackle terrorism and international crime.
Ms Lagarde continued: “Once uncertainty clear if people feel that their ability to set up shop in the UK and operate throughout the geographical area that is the European Union 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 praised the “extraordinary” response from the Bank of England and the “quite remarkable” behaviour by British consumers who have continued to spend, insisting that it had helped the economy defy the negative forecasts – including that of the IMF.
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