Christine Lagarde departs at a moment of peril

Christine Lagarde, 70, will leave the ECB in February, nine months early, and is likely to head the World Economic Forum. Reported facts: France’s failure to agree credible budgets has pushed its spread over German bonds to levels last seen in the early-2010s euro crisis, and Marine Le Pen, who once called for abolishing the euro, may win the presidency next year. The article reviews her tenure (Covid bond-buying after a badly received “not here to close spreads” remark; 4.5 points of hikes between July 2022 and September 2023 bringing inflation to about 2% by late 2024; the 2022 transmission-protection instrument). Succession is political: main contenders are Pablo Hernández de Cos (Spain, BIS) and Klaas Knot (Netherlands, ex-central-bank governor), and France reportedly accepts a more hawkish boss such as Knot if the chief economist is French. The Economist’s view is that the successor must persuade France to cut spending and that Germany may want a blunt Dutch voice to tell Paris its high yields are self-made; it doubts the 2027 election will bring clarity.