EU referendum: IMF calls on UK and EU to play nicely during divorce proceedings

Jake Cordell
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Christine Lagarde was a controversial figure in the EU referendum campaign
Christine Lagarde was a controversial figure in the EU referendum campaign (Source: Getty)

The head of the International Monetary Fund (IMF) has urged the UK and the EU to reach an amicable divorce, as the fallout from the vote for Brexit ripples across the world.

Christine Lagarde, who warned Brexit could trigger a recession, called on both sides to work together to reach a new settlement which helps to minimise turmoil on the financial markets.

She also welcomed steps taken by central banks to ensure markets have access to emergency funds to prevent the kinds of sharp movements which were driven by weak liquidity during the darkest days of the financial crisis.

Brexit Britain: What you need to know

In a statement issued this afternoon, Lagarde said:

"We take note of the decision by the people of the UK. We urge the authorities in the UK and Europe to work collaboratively to ensure a smooth transition to a new economic relationship between the UK and the EU, including be clarifying the procedures and broad objectives that will guide the process."

The call comes as the two sides appeared at odds over how quickly the UK should begin the painstaking process of formally exiting the EU. David Cameron said he will leave the decision to trigger Article 50 - the mechanism by which a member can leave the EU - to his successor, who is expected to be in place by October.

How well the UK performs is now dependent on whether the fallout from Brexit is "limited" or "adverse", according to the IMF.

EU leaders, however, want the UK to get a move on, and issued a robust statement this morning saying negotiations should begin "as soon as possible".

As sterling suffered its biggest ever one day fall since it became a free-floating currency, Lagarde added: "We strongly support commitments of the Bank of England and the ECB to supply liquidity to the banking system and curtail excess financial volatility."

The IMF was a controversial outfit in the referendum campaign. Its economic forecasts were roundly attacked by Leave campaigners with George Osborne also accused of calling in favours from Lagarde. Analysis published over the weekend suggested the UK economy would be plunged into recession next year if a vote to Leave results in prolonged uncertainty.

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