Britain’s Chancellor of the Exchequer Rishi Sunak has called for global action to tackle the supply chain crisis before the G20 and G7 meetings take place.
Mr Sunak urged G20 finance ministers from the world’s most advanced economies to work together to resolve the supply challenges, which has ground economies such as the UK's to a halt and left some supermarket shelves empty.
“Global co-operation is key to addressing our shared challenges as we emerge from the pandemic,” Mr Sunak said before his first official visit to the US, where he will attend a meeting of G20 finance ministers and chair the final in-person meeting of the G7’s finance chiefs under the UK’s presidency.
“From global tax reform to global supply chains, we must work together to seek international solutions for the benefit of our citizens at home.”
Mr Sunak’s call to action stressed the importance of continued vaccine distribution across the globe as well as “co-ordinated action and ambitious emissions reduction targets” from the whole G20 to boost the transition to net zero.
Global shipping problems, tight supplies of semiconductors and shortages of some goods such as motor vehicles have contributed to rising inflation in many countries including Britain in recent weeks.
Mr Sunak will urge G7 finance ministers to boost support for vulnerable countries, particularly through channelling Special Drawing Rights, a type of international reserve asset issued by the International Monetary Fund.
The G7 Panel on Economic Resilience on Tuesday set out its proposals to ensure global resilience to help tackle today's major challenges, covering global supply chains, vaccine distribution, access to critical minerals, cyber threats, digital tax, crypto-assets and the transition to green growth.
The panel, made up of eight experts appointed by G7 leaders and chaired by the Prime Minister’s G7 Envoy for Economic Resilience, Lord Sedwill, recommends driving international and domestic investment in economic resilience to deliver the new infrastructure and research needed to respond to the challenges of the coming decade.
The panel's recommendations for systemic economic reform, set out in the 'Cornwall Consensus', also demanded that international trade rules enable the green transition, and that the leading economies commit to information sharing, traceability and Environmental, Social and Governance standards' reform for minerals critical to the green transition.
Meanwhile, after the historic $650bn allocation in August to boost global liquidity, Mr Sunak, on his trip to the US, will encourage G7 and G20 finance ministers to contribute to the IMF’s Poverty Reduction and Growth Trust, which provides zero-interest loans to vulnerable countries in need of financial support.
Action on climate change vital
Meanwhile, with only weeks until the UK hosts the Cop26 environmental summit in Glasgow, Mr Sunak will urge the G7 to take a leading role on mitigating climate change through co-ordinated action to reduce emissions as the world transitions to net zero.
Last month, the UK raised £10 billion ($13.6bn) from the sale of Green Gilts – the largest ever green issuance by a sovereign.
The IMF cut its forecast for UK economic growth on Tuesday by 0.2 per cent as it warned the country was vulnerable to an inflation shock that could stifle its economic rebound.
The UK economy will grow 6.8 per cent this year, down from its July forecast of 7 per cent, the Fund said, but this will still make it the fastest-growing advanced economy this year despite the country suffering one of the largest contractions in 2020.
Mr Sunak said the forecasts showed the strength of the country's recovery, with the UK having the fastest growth forecast in the G7 this year.
“Our plan is working,” he said. “We are supporting the economy as we rebuild and making sure everyone can benefit from new opportunities through our Plan for Jobs.”
Sunak aims to return UK to top of financial world
Separately, Mr Sunak is being urged to reinforce Britain’s competitiveness and reinstate the UK as the world’s leading financial centre within five years when he hosts his 2021 Budget and Spending Review this month.
TheCityUK, a trade body for the UK-based financial and related professional services industry, supports the chancellor’s vision to make “this country the world’s most exciting financial services hub for decades to come".
Delivery of that vision requires close co-operation and a concerted effort between government, industry and regulators, it said.
“The future of the UK’s status as a world-leading international financial centre rests on a vision based on openness, competitiveness and connectivity,” said Miles Celic, chief executive of TheCityUK.
“There must be continued investment across the country, the deployment of world-leading technology must continue and our expertise in key future markets such as green finance enhanced. Achieving these goals will need closer working between government, industry and regulators.”