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IMF chief urges decisive action to solve "terrifying and unacceptable" unemployment rates

Christine Lagarde issues stark warnings to US and eurozone politicians over mounting uncertainties in the global economy.

The International Monetary Fund’s managing director Christine Lagarde has called for decisive action to tackle the eurozone’s “terrifying and unacceptable” levels of unemployment.

Speaking in Tokyo at the IMF and World Bank’s annual meeting, Lagarde implored that the global economy needs urgent action to “lift the veil of uncertainty” that has shrouded the global economy.

“Whether you turn to Europe, to the United States of America, there is a level of uncertainty that is hampering decision-makers from investing, from creation jobs”, she said.

Lagarde also reasserted that insecurity in the eurozone and the US is “having a ripple effect on emerging markets, and in particular Asia”.

The warning comes just days after the IMF slashed its 2012 growth forecast down from 3.5 per cent to 3.3 per cent, the slowest since the 2009 recession.

“The recovery continues, but it continues more slowly than we had expected earlier this year”, said Lagarde.

Predictably, Lagarde placed emphasis on the eurozone, saying that it remained “the epicentre” of the global economic slowdown. 

The eurozone unveiled its much-awaited €500bn European Stability Mechanism rescue fund on Monday, whilst European governments have taken significant steps to cut budget deficits. However, plans to introduce a European banking supervision system have hit a speed-bump as Germany wants more time to finalise the details.

“Action has already occurred”, Lagarde said. “But more needs to happen faster”.

Lagarde also extended her appeal to the US, warning that the economy faced severe “fiscal risks”, in reference to the tax increases and spending cuts scheduled for early next year. The “fiscal cliff”, as it’s called, would pose a profound threat to the world’s largest economy unless Congress takes significant steps to overcome a budget impasse.

Lagarde expressed her disappointment in China’s absence at the summit, with flaring Sino-Japanese tensions over the disputed Senkaku/Diaoyu islands prompting China to boycott the meetings.

“They lose out by not attending”, she said. “We hope that differences … can be resolved harmoniously and expeditiously so that, from an economic point of view, cooperation can continue”.

The annual meetings are scheduled to draw to a close on Sunday.

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.