Lagarde’s challenges start close to home
When things get heated at work it’s only a matter of time before someone proposes an “off site.”
Getting away from the office and taking in new surroundings can work wonders for morale and facilitate fresh thinking.
It was in this spirit that the new head of the European Central Bank (ECB), Christine Lagarde, whisked her top team off to the Schlosshotel Kronberg.
Lagarde may be hoping that some five-star luxury will help heal the rifts that have divided the ECB’s rate-setting body, the Governing Council.
The Council comprises six members of the ECB executive board plus the governors of eurozone central banks.
Things got off to a poor start when Lagarde tweeted an image of her assembled team, in which she stands out as the only woman. She ought to add “promoting diversity” to her long to-do list.
For now, there are bigger fish to fry. The ECB has faced open dissent from German, Dutch and Austrian central bankers , and Lagarde’s predecessor, Mario Draghi, hardly helped matters with his parting shot — telling member states (particularly Germany) to splash the cash at home.
The ECB’s long-running stimulus scheme has also attracted increasingly vocal criticism.
This is the scene inherited by Lagarde: a disunited Council, stuttering Eurozone growth, increasing concerns over the international bond market and damaging trade wars.
It will take more than one of the Kronberg’s famous spa treatments to calm things down. In addition to the economic challenges facing Lagarde, she must contend with the concern that her appointment was too political (President Macron ensured she got the job) and that she will take the ECB into political clashes.
She’s already done this by renewing calls for greater stimulus at a member-state level, and her vow to put climate change on the ECB’s agenda risks provoking yet more political rows.
Her biggest clash could be with Germany, where the political culture still favours a budget surplus.
Will she become a combatant in a Franco-German argument about economic policy?
The Royal Suite at the Kronberg (£2,000 per night) was once the living quarters of the last German Emperor, Frederick II.
It could serve as a comfortable spot in which to plot her next moves. But if Lagarde is to play a role in reviving the Eurozone, with or without Germany’s help, she’ll need to reset relations with her Governing Council, and fast.
Main image: Getty