The International Monetary Fund’s very busy day

It’s been a consequential day for the International Monetary Fund.

First, the Fund released the concluding statement from its weeks-long review of the U.K. economy. Because the Fund’s chief economist had previously criticized the government’s austerity policies, the annual "surveillance" report was highly anticipated. Unsurprisingly, it’s a pretty cautious document. The IMF applauds the government for having brought down deficits and for showing "welcome flexibility in its fiscal program." There are implicit criticisms. The report warns that planned further fiscal tightening will be "a drag on growth" and notes that the country is a long way from a sustainable recovery. Overall, however, it’s far from a public scolding:

In reality, the report is far less stern on the Chancellor than many had anticipated. Yes, there’s plenty of verbiage about the problems facing the economy: about the fact that growth has disappointed, that per capita income is still 6% below the pre-crisis peak, that risks facing the economy remain significant, and that the financial system remains in poor health.

However, the critical parts of the document – those that deal with the Chancellor’s fiscal plans – are far more measured, far less critical, than the IMF’s previous comments might have indicated.

Still, Labour politicians are seizing on the report’s admonitions:

Labour said that the IMF’s advice echoed its own longstanding call for Mr Osborne to ease up on his cuts. “A sensible Chancellor would listen to the IMF’s advice and take action” said the shadow Chancellor Ed Balls. “Only a reckless Chancellor would try to plough on regardless.”

Meanwhile, in Paris, IMF managing director Christine Lagarde is facing her own personal form of surveillance: a panel of judges is interviewing the former finance minister as part of their investigation into l’affaire Tapie. Via Reuters:

Lagarde risks being placed under formal investigation at the hearing for her 2007 decision as Sarkozy’s finance minister to use arbitration to settle a long-running court battle between the state and high-profile businessman Bernard Tapie.

Under French law, that step would mean there exists "serious or consistent evidence" pointing to probable implication of a suspect in a crime. It is one step closer to trial but a number of such investigations have been dropped without any trial.

For the moment, key IMF members are steadfast in their support for Lagarde. If the judicial process takes a more serious turn, however, fissures may emerge. The selection process that produced Lagarde was contested, and some emerging powers still resent that the Fund’s top post remains in European hands.