Bail-outs of the world's banks pose a threat to free trade, warned Pascal Lamy, head of the World Trade Organisation.

“There is a danger that the finance industry will be on the side of the forces of deglobalisation,” he said in an interview with the Financial Times. The government bail-outs had “constrained risk-taking” outside the familiar territories of national markets and this was already affecting foreign direct investment, now forecast to fall 50 per cent this year. “If there is less FDI there will be less trade,” Mr Lamy said.

Speaking from the annual conference of France's Cercle des Economistes in Aix-en-Provence, Mr Lamy said he planned to attend this week's G8 summit of world leaders in Italy to urge governments to resist growing pressures for protectionist measures and to keep the channels of trade open in finance as well as industry.