Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

Christine Lagarde warns against 'complacent' Europe

    Just Watched

    Lagarde warns of European complacency

Lagarde warns of European complacency 03:39

Story highlights

  • IMF chief Christine Lagarde says Europe must reform "so their economies can unleash growth and create jobs."
  • Lagarde's comments come after the eurozone economy grew 0.3% in the second period of this year.
  • Youth unemployment in Spain and Greece is above 50%; while rates in Portugal, Italy and Ireland are all above 30%

The head of the International Monetary Fund is warning European governments against complacency despite the region returning to growth earlier this year for the first time since 2011.

Speaking at the Fund's headquarters in Washington DC, managing director Christine Lagarde told CNN's Richard Quest that member states cannot afford "fatigue" on their commitments to create jobs and to shore up the region's banks.

Read more: Fishing for positives in Portugal's economy

"They need to move on with the European banking union," she said, "continue structural reforms so their economies can unleash growth and create jobs."

Lagarde's comments come after the eurozone economy grew 0.3% in the second period of this year following six consecutive quarters of contraction.

Europe out of limelight

    Europe has been spared some market scrutiny recently, as headlines shifted to the U.S. debt ceiling negotiations and the Federal Reserve's bond-buying program.

    Read more: Europe feeling the economic winds of change

      Just Watched

      Europe's energy challenges

    Europe's energy challenges 03:10
    PLAY VIDEO

    Lagarde said that leaders in the currency union will be eager to remain out of the limelight.

      Just Watched

      Solving Portugal's economic woes

    Solving Portugal's economic woes 01:40
    PLAY VIDEO

    She told CNN: "[In the past two years] I don't think there has been a single G20 or IMF meeting without the eurozone being at the center of the debate and they don't want that to happen again."

      Just Watched

      Is Serbia ready for EU membership?

    Is Serbia ready for EU membership? 04:58
    PLAY VIDEO

    Read more: Energy boss: No second bailout for Portugal

    Lagarde added: "If they want that to last they have to continue doing the work that they have started."

    Since the crisis began, European governments have had to contend with spiraling borrowing costs and state bailouts as nations struggled to repay their debts.

    Read more: Serbian confectioner enjoys sweet success

    In four years, Greece, Portugal, Cyprus and Ireland have received over 400 billion euros ($534 billion) in bailout packages from the euro-area's rescue funds.

    And last year European finance ministers approved a 39.5 billion euro ($51.6 billion) lifeline for Spain's banks, struggling after the property bubble went bust.

    In return for state aid, creditors have imposed strict rules on debtor nations, forcing them to carry out harsh austerity measures.

    Read more: Will Serbia be next to join EU?

    However, that strategy has come under question. Mujtaba Rahman, Europe director at Eurasia Group, said Germany may believe austerity is working but "clearly there's a strand that believes otherwise."

    Some eurozone economies, he noted, believe they have improved after easing off on austerity.

    Tackling youth unemployment

    Lagarde, a former French finance minister, also highlighted youth unemployment as the biggest priority on the policy-making agenda.

    She said: "Countries have to do their job; the IMF will help the process as well so we have to partner goodwill, the money available and political determination to focus on the right issues."

    Read more: Mutti Merkel is no Iron Lady Thatcher

    Youth unemployment in Spain and Greece is above 50%, where strict austerity programs are in place, while rates in Portugal, Italy and Ireland are all above 30%.

    Widespread unemployment has led to anti-austerity protests in the worst-hit nations with many demonstrations turning violent.

    But Rahman believes that youth unemployment is a problem that must be tackled by domestic governments rather than at the European level.

    He added: "It's clear that politicians are not willing to mobilize a large amount of resources within the EU budget to tackle the problem of youth unemployment, not in a meaningful way."

    He added: "At the margin there may be a commitment do something but this isn't meaningful."

        Marketplace Europe

      • spc marketplace europe latvia valdis dombrovskis_00021207.jpg

        CNN's Nina Dos Santos visits Latvia to speak to the country's outgoing Prime Minister and the prospects for the eurozone's 18th member.
      • spc marketplace europe malta immigration africa_00002118.jpg

        Malta is the gateway to Europe and on the frontline of the immigration flows. Isa Soares reports from a detention center on the Mediterranean island.
      • spc marketplace europe malta immigration vox pops_00001419.jpg

        CNN's Isa Soares speaks with people on the streets of Valletta who say their country can't cope with more migrants from Africa and the Middle East.
      • spc marketplace europe malta george vella_00032005.jpg

        Malta cannot afford to continue supporting migrants from war-torn countries in its over-crowded detention camps, the country's foreign minister has told CNN.
      • spc marketplace europe 2013 what went wrong_00020426.jpg

        Slow recoveries, bailouts, and youth unemployment. Richard Quest speaks to Europe's top CEOs about the issues of 2013.
      • spc marketplace europe 2013 defining moments bob parker intv_00010826.jpg

        CNN's Richard Quest speaks to economist Bob Parker about defining moments of 2013 and about what to expect in 2014.
      • spc marketplace europe estonia energy_00000923.jpg

        The Baltic nation of Estonia is developing its oil shale energy reserves in a bid to become energy self-sufficient.
      • spc marketplace europe nani beccalli falco_00041005.jpg

        Europe must stop being nationalistic if it wants to help a lost generation of workers, the regional boss of U.S. conglomerate General Electric says.
      • spc marketplace europe greece petros christodoulou_00002025.jpg

        Greece is on the way to economic recovery as investor faith returns to the recession-ridden eurozone nation, an executive at Greece's largest bank has told CNN.
      • spc marketplace europe euro jim cloos_00012617.jpg

        One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.
      • spc marketplace europe maastricht eu_00002401.jpg

        Nina Dos Santos visits the Dutch city where the European treaty carrying the city's name came into force 20 years ago.
      • spc marketplace europe spain working hours_00010525.jpg

        As Spain continues its drive to slash budgets and cut spending, one of the nation's favorite pastimes is under threat as ministers look for ways to boost productivity.