Trump is ‘clear threat’ to Europe, says Christine Lagarde

Christine Lagarde has warned that Donald Trump is “clearly a threat” to Europe, as the head of the European Central Bank raised concerns about a fresh trade war if he is re-elected US president.

In a series of critical comments for a central banker, Ms Lagarde told French television that the Republican frontrunner in the presidential race was likely to renew tensions between the two economic blocs.

“If we should learn lessons from history, from the way he led the first four years of his mandate, it is clearly a threat,” she said.

“It’s sufficient to look at the trade tariffs, the commitment to Nato, the fight against climate change. In just these three areas, in the past, US interests were not aligned with European interests.”

However, Ms Lagarde played down concerns that escalating tensions in the Red Sea will lead to a fresh wave of inflation, telling France 2 TV that those situations were “more or less under control”. She was speaking before the US and UK launched airstrikes against the Houthis’ military bases in Yemen.

Addressing the central bank’s battle against inflation, which currently stands at 2.9pc, she added: “I think the hardest part is behind us,” said Lagarde, adding that interest rates had probably peaked at 4pc. She signalled that the ECB would start to consider cutting rates once policymakers were certain that inflation would reach its 2pc target sustainably.

Ms Lagarde also said that she had faith that Congress would not allow Mr Trump, who was US president between 2017 and 2021, to starve Ukraine of vital financial and military aid.

She said: “You mustn’t forget that even in a presidential system like the American one, the Congress has considerable strength.”

Asked if a second Trump presidency could leave Europe isolated in supporting Ukraine she said: “In the US Congress, there are a number of elected members who are deeply hostile to Russia’s horrific war against Ukraine and who will continue to finance and support Ukraine”.

Ms Lagarde has been critical of Mr Trump’s trade policies in the past. She has also openly criticised Vladimir Putin, describing the Russian president as “terrifying” and “driven by evil forces”.