G20 to Utilize ‘All Policy Tools’ for Growth Amid Brexit Concerns, Reports Reuters

By William Schomberg and Elias Glenn

CHENGDU, China — The largest economies in the world have pledged to enhance global growth and distribute the benefits of trade more equitably, according to policymakers following a recent meeting that focused on the implications of the UK’s departure from the European Union and worries about rising protectionism.

Philip Hammond, the new British finance minister, indicated that uncertainty surrounding Brexit would begin to decline once the UK presents a clearer vision for its future relationship with Europe, a scenario that may come into focus later this year.

However, he cautioned that financial markets may experience volatility during the upcoming negotiations in the coming years. “What will start to reduce uncertainty is when we are able to set out more clearly the kind of arrangement we envisage going forward with the European Union,” Hammond stated to the press.

He added, “If our European partners respond positively to such a vision—as it will need to be negotiated—it could create a sense of alignment later this year about our shared expectations for the future. This would send a reassuring signal to businesses and markets.”

A statement released by the G20 ministers at the end of their two-day meeting indicated that discussions were heavily influenced by Brexit, which has contributed to increased uncertainty in the global economy, where growth is described as “weaker than desirable.” Nevertheless, they asserted that members are “well positioned to proactively address the potential economic and financial consequences.”

“We are taking actions to foster confidence and support growth,” the statement noted.

“In light of recent developments, we reiterate our commitment to utilize all available policy tools—monetary, fiscal, and structural—to achieve our objective of strong, sustainable, balanced, and inclusive growth.”

The International Monetary Fund recently revised its global growth predictions downward due to the Brexit vote.

The focus during this meeting differed from previous ones where monetary policy was a main topic; instead, discussions centered more on promoting growth. This sentiment was echoed by other officials, including U.S. Treasury Secretary Jack Lew, who stated there was a shared understanding of the need for increased growth amid a continuing global recovery weakness, which facilitated consensus-building.

Concerns over protectionism, highlighted by both Brexit and the “America First” rhetoric from U.S. Republican presidential candidate Donald Trump, were also significant points of conversation. A Japanese finance ministry official mentioned ongoing risks associated with low growth, calling for monitoring of various developments, including terrorism and geopolitical risks.

The G20 emphasized “the role of open trade policies and a strong global trading system in fostering inclusive economic growth” and committed to further efforts to invigorate global trade and boost investments. However, they acknowledged that “the benefits of growth need to be shared more broadly within and among countries to promote inclusiveness.”

The group recognized the challenges posed by industrial overcapacity, especially in the steel sector, which negatively impacts trade and employment. They noted that overcapacity is a “global issue requiring collective responses.”

Furthermore, they highlighted that government subsidies and other forms of support could distort markets and contribute to global excess capacity, which necessitates attention.

Concerns regarding potential competitive currency devaluations were also discussed, and the collective agreement to avoid such actions was reiterated, although these issues did not receive as much emphasis as in previous meetings in February.