WASHINGTON – The head of the International Monetary Fund said Wednesday the greatest threat to a lasting economic recovery in Europe is “the fatigue of both governments and populations” over painful steps taken to boost growth and combat national debt.
IMF Managing Director Christine Lagarde said the economy seems better in the United States, although she’s watching the effects of automatic budget cuts.
LaGarde was asked on “CBS This Morning” about a Time magazine cover asking, “Can this woman save Europe?”
She responded that Europeans essentially are responsible for their own fate.
LaGarde said that recovery efforts will take time because 17 countries are trying to get together for a political and financial accommodation. Lagarde also said she worries that Europeans might be thinking “they’ve done enough and now it’s time to reap the benefits.”
Most governments in Europe have been on a quest to reduce high public debt for the past three years. The spending cuts and tax increases necessary to do so, however, have hurt economic growth. The 17-country eurozone is expected to have remained in recession in the first quarter. Countries that have had to take the most aggressive austerity measures have been in protracted recessions — Greece’s economy has been contracting for over five straight years.
The measures are taking a toll on people, with living standards dropping as unemployment hits record highs. Eurozone unemployment is now at 12 percent, with youth joblessness at a staggering 23.5 percent.
Discontent has spread and led to street protests and general strikes. Political parties that oppose austerity measures have gained in popularity, destabilizing governments.