IMF head Christine Lagarde warns of middle-class crisis

The middle classes are shrinking in the West as the super-rich get richer, and the squeezed middle are facing a “crisis”, according to Christine Lagarde, the head of the International Monetary Fund, speaking at Davos.

In a World Economic Forum debate entitled Squeezed and Angry: How to Fix the Middle-Class Crisis, Lagarde said the middle class had shrunk in Western economies.

“With lower growth, more inequality and much more transparency, I think you have the good ingredients of what is defined now as a crisis of the middle class in the advanced economies,” she said.

She claimed, however, “courageous” politicians still had a chance to reconnect with the middle classes.

“They must create policies that address concerns such as what future their children face and what safety net will be in place,” she said.

Fellow panel member Larry Summers, the Harvard economist, warned the squeeze on the people “in the centre of the country” had caused Brexit and other populism-fuelled votes this year.