Christine Lagarde, head of the International Monetary Fund (IMF) and Mario Draghi, president of the European Central Bank (ECB) said governments and institutions needed to make sure their policies did not leave the poorest members of society behind, and called for structural reforms to help share the spoils of economic growth.
Speaking in Canada, in what analysts saw as a thinly-veiled attack on the ideas of the Republican presidential candidate Donald Trump, said: “There is a growing risk of politicians seeking office by promising to ‘get tough’ with foreign partners through punitive tariffs or other restrictions on trade.
“But history tells us that closing borders or increasing protectionism is not the way to go. Many countries have tried this route, and just as many have failed.”
Trump has famously committed to building a physical wall between the US and Mexico in order to stop illegal immigration and has also promised to slap big tariffs on imports. Meanwhile, both Trump and his Democratic rival Hillary Clinton have also expressed their opposition to Barack Obama’s landmark trans-pacific partnership (TIPP) trade deal signed earlier this year, but not yet ratified.
Draghi also pushed against Europe’s politicians to ensure they did not leave European citizens behind in the process of integration.
Addressing the UK’s decision to leave the bloc along with the rise of populist politicians across the continent, Draghi said: “The more recent years of the European project have been characterised by growing dissatisfaction.
“Large-scale migration has called into question established ways of life and long-accepted social contracts, and stirred up feelings of insecurity and defensiveness. It is not surprising then that many feel left behind. Anxiety is growing.”
The ECB president, who has incessantly called on Eurozone governments to implement structural reforms also raised concerns that the responses from politicians “have, at times, been reminiscent of the interwar period: isolationism, protectionism, nationalism.”
The duo both reiterated their calls for governments not to pull up the drawbridge in response to growing discontent with globalisation. Lagarde said countries needed to introduce more direct and stronger support for low-skilled workers through higher minimum wages and more investment in training and education.