Finance chiefs from the Group of 20 (G20) of the world’s biggest economies concluded a summit in the Chinese city of Chengdu by pledging to work to support global growth and better share the benefits of trade.
The repercussions of the UK’s decision last month to exit the European Union (EU) and concern over rising protectionism in many countries dominated the agenda. The G20 leaders agreed that the Brexit vote “adds to the uncertainty” over the outlook for the global economy.
UK chancellor Philip Hammond confirmed that Brexit had come up “a great deal” in discussions. “The reality is there will be a measure of uncertainty continuing right up to the conclusion of our negotiations with the EU,” he said.
This would lessen as the UK laid out a vision for its future relationship with Europe, which could become clearer later this year. However, there could be volatility in financial markets during the negotiations over the coming years ahead.
“If our EU partners respond to such a vision positively – obviously it will be subject to negotiation – so that there is a sense perhaps later this year that we are all on the same page in terms of where we expect to be going. I think that will send a reassuring signal to the business community and to markets,” Hammond added.
A communique issued by the G20 ministers at the end of the two-day meeting said that although Brexit added to uncertainty in the global economy where growth was “weaker than desirable” members were nonetheless “well positioned to proactively address the potential economic and financial consequences.
“In light of recent developments, we reiterate our determination to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth.”
The communique also noted problems caused by industrial overcapacity, particularly the steel sector, which negatively impacted on trade and workers. Overcapacity was “a global issue which requires collective responses”.
Also addressed were continuing concerns over the potential for competitive currency devaluations and members reaffirmed their commitment to refrain from them.
By 2030 artificial intelligence will add more than US$15 trillion to the world economy according to the group’s research, but most of that gain will go to North America, Europe and Asia.
Companies are warned that they must improve their resilience, as incidents such as this week’s ‘Petya’-style attack become increasingly common.
A report by the Lloyd’s of London insurance market finds that the sector is second only to financial services as the target of attacks.
The Bank of England calls for UK banks to put aside an extra £11.4bn to deal with any future economic slowdown in its latest financial stability report