The Eurozone crisis - the day's news

Eurozone crisis live: IMF's Lagarde warns of return to Great Depression - 15 December 2011

• Christine Lagarde warns that no country is immune from the financial crisis

• Czech Republic and Hungary oppose tax harmonisation

• France says Britain should lose its AAA rating

• UK gilt auction sees lacklustre demand

• Eurozone poised for 'mild' recession

• China manufacturing PMI still contracting

Here's an evening summary.

• Christine Lagarde has warned that the world could slip into a repeat of the Great Depression. The IMF urged global leaders to work together to address the crisis, or face protectionism and isolation

• France's top central banker claimed that Britain should lose its AAA rating first. In a remarkable statement, Christian Noyer claimed that the UK economy was in worse shape than its Gallic rival. In response, Downing Street said it had a responsible plan to solve the crisis.

• The rescue plan agreed by EU leaders (excluding David Cameron) last week appeared to unravel. Hungary and the Czech Republic both voiced opposition to any attempts to harmonise tax regimes across the EU.

• Fitch downgraded eight of the world's biggest banks. It warned that Bank of America, Barclays, Goldman Sachs, Deutsche Bank, BNP Paribas, Credit Suisse, Morgan Stanley and Societe Generale all faced tough times as the financial crisis worsens.

• Spain held a successful bond auction. The yield at the sale of €6bn of Spanish debt dropped. The UK also sold some gilts today, but saw a fall in demand.

9.58pm: Christine Lagarde's warning today dominates the front page of tomorrow's Guardian. Here's a flavour:

The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe's deepening debt crisis, the head of the International Monetary Fund has warned.

On a day that saw an escalation in the tit-for-tat trade battle between China and the United States and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of "retraction, rising protectionism, isolation".

She added: "This is exactly the description of what happened in the '30s and what followed is not something we are looking forward to."

9.22pm: Eight of the world's biggest banks have just been downgraded by Fitch.

Bank of America, Barclays, Goldman Sachs, Deutsche Bank, BNP Paribas, Credit Suisse, Morgan Stanley and Societe Generale all saw their "Viability Ratings" (a measure of credit worthiness) cut.

The first six banks also saw their Issuer Default Ratings (another measure of default probability) cut.

All eight of the global trading and universal (GTUB) banks are seen as "systemically important". In other words - too big to fail. Out of the group, only UBS had its ratings affirmed.

Fitch said that the downgrades "reflected challenges faced by the sector as a whole, rather than negative developments in idiosyncratic fundamental creditworthiness."

It warned that the banks all face difficult economic conditions:'

These challenges result from both economic developments as well as a myriad of regulatory changes.

Fitch incorporated the significant progress it sees the banks have made in building up capital and liquidity buffers to resist market challenges, which has kept the VR downgrades to one or two notches. Nonetheless, Fitch continues to be of the opinion that, however well-managed, the structural aspects of their funding, earnings, and leverage, predispose GTUBs to vulnerability to market sentiment and confidence, particularly during periods of exogenous financial stress.

Furthermore, the complexity of their business models and exposure to fat tail risk make it more difficult to assess the size of loss that could emerge rapidly from unexpected events.Over time market conditions are likely to ease, but Fitch expects market volatility to remain above historical averages and economic growth in developed markets to remain subdued for a prolonged period. This makes many business lines in securities operations more difficult, due to lower activity and higher funding costs.

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