Veteran British director Ken Loach lashed out on Sunday at Europe's fiscal austerity and warned it could spur the rise of the far-right when accepting the 2016 Cannes Palme d'Or for best film.

“The cinema can bring us the world of imagination and the world we live in and the world we live in is at dangerous point now," he told the gala award ceremony.

"We're in the grip of a project of austerity driven by ideas, what we call neo-liberalism, and that has brought us to near catastrophe and has brought hardship to many in Greece in the east and Portugal and Spain in west, and grotesque wealth to a few," said Loach.

"There is a danger of despair that people from the far right take advantage of," he said.

"Some of us are old enough to remember what that was like. So we must say that something else is possible, another world is possible and necessary," he said.

Loach's film - I, Daniel Blake - was one of 21 films vying for the Palme d'Or, which is one of the most coveted awards in cinema.

I, Daniel Blake, is the 79-year-old Loach's 13th entry in the festival's main competition.

It tells the story of an injured carpenter and a single mother struggling with the bureaucratic nightmare of the British health system.

It is the second time Loach has won the award. He clinched the coveted prize in 2006 for his film The Wind that Blows the Barley about the Irish War of Independence in the early part of the last century.

Headed up this year by Mad Max director George Miller, the nine-member jury awarded this year's Grand Prix to Canadian director Xavier Dolan for It's Only the End of the World, his portrayal of a man returning home after an absence of 12 years to tell his family he has a terminal illness.

The Grand Prix is the festival's second prize after the Palme d'Or.

Cannes' third prize, the jury prize, went to British director Andrea Arnold for American, her story about a group of young magazine sellers on an endless party and drug-fuelled trip across the United States.

Romania's Cristian Mungiu and France's Oliver Assayas shared the best director award.

Mungiu's Bacalaureat (Graduation) told the story of a small-town doctor who reverts to covert means to ensure his daughter passes a key examination after she is attacked.

Assayas' The Personal Shopper is a ghost story set in Paris with US actress Kristen Stewart starring as a personal shopper.

Iran's Shahab Hosseini won the award for best actor for his role as the husband in Asghar Farhadi's The Salesman about a young couple, who move into a new apartment only to face a dramatic change in their life after the wife is attacked in an incident related to a previous tenant.

Jaclyn Jose won the best actress award for her role as a mother who runs a convenience store in Manila and sells drugs on the side in Filippino director Brillante Mendoza's Ma’Rosa.

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