The EU’s top three central bankers sounded the alarm on economic recession on Friday, warning that political paralysis leaves Europe even more vulnerable to a potential trade war with the US.

In a rare and strongly worded joint statement, the governors of the Bundesbank and Banque de France said Europe would be “doomed” if Germany and France could not revive “joint Franco-German action”.

At the same time, Christine Lagarde, president of the European Central Bank, in her speech emphasized the urgent need for capital markets reform, which has not made the required progress despite growing risks.

He lashed out at Europe’s “extremely fragmented” financial markets and called on political leaders to “override traditional interests defended like fortresses in ancient times”.

Joachim Nagel and François Villeroy de Galhau, the governors of the central banks of Germany and France, are due to speak on Friday at the European Banking Conference in Frankfurt.

Their call for “joint Franco-German action” was presented in an article published in the Frankfurter Allgemeine Zeitung and Le Monde, arguing that Donald Trump’s victory in the US presidential election was likely to increase pressure on Europe’s struggling economy and “should be taken as a wake-up call.”

Nagel and Villeroy de Galhau called for a “deepening” of Europe’s single market, a “savings and investment union” as well as less bureaucracy and more defense cooperation.

In a reference to the lack of Franco-German initiative in these areas, the bankers warned: “To divide us would be to condemn us and to condemn Europe.”

Both central bankers stressed that while both support the policy of “common European debt” – a highly controversial issue across European states proposed by former ECB president Mario Draghi – this is not “a prerequisite for moving forward”. Instead, the bloc should “prioritize the many costly and more structural” actions.

In his speech at the banking conference, Nagel warned that a trade war could “cause significant GDP losses in the US and abroad” and is likely to fuel inflation “on both sides of the Atlantic”. The president of the Bundesbank also said that the Eurozone has not yet managed to deal with the “loop of disaster” that can trap indebted governments and banks.

Lagarde pointed out that little progress has been made towards capital markets union in the past decade.

“Since 2015, there have been more than 55 regulatory proposals and 50 non-legislative initiatives, but breadth has come at the expense of depth,” adding that lobby groups have succeeded in blocking progress by maintaining “a patchwork of national corporate, tax and environmental laws.” securities”.

Consequently, “capital in Europe is either trapped within national borders or leaves for the US,” he added.