BEIJING (AP) – Global finance officials promised Sunday to protect the world economy from the shockwaves of Britain’s European Union referendum and to boost sluggish growth.
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Concerns about slowing growth in China, the world’s second largest economy, have receded into the background at the G20 in the face of other threats.
The UK Chancellor Philip Hammond and finance ministers of the G20 nations are meeting in China.
International Monetary Fund chief economist Maurice Obstfeld said the bank was prepared “as of June 22” – the day before Britain’s vote – to slightly mark up its global forecast, citing unexpectedly strong growth in Europe and Japan and a partial rebound in global commodity prices. Philip Hammond faced concerns about how quickly the United Kingdom prepared to continue with formal negotiations to leave the EU.
The results of the referendum prompted David Cameron to step down as prime minister and leave the exit process to his successor Theresa May, who was named within a few weeks after his resignation.
French Finance Minister Michel Sapin told AFP that terrorism had become an economic risk: “Today the frequency of attacks creates a new situation of uncertainty, which is at least as damaging as regional destabilisations or a regional conflict”.
“We also need to do a better of job of explaining why this cooperation is important to the lives or our citizens in terms of jobs, economic growth and stability”, the Treasury official said.
“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 told reporters.
Certainly, the benefits of these efforts are unlikely to be seen quickly enough to influence USA voters in the November presidential election, where both Republican Trump and Democrat Hillary Clinton have declared their opposition to the 12-country Trans-Pacific Partnership free trade deal. But economists are expecting Britain to fall into a recession, according to a Reuters poll.
The communique said Brexit had added to uncertainty in the global economy where growth was “weaker than desirable”.
“What it does is underscore the hit to confidence”, he said.
Ms May has said she does not plan to launch the formal negotiation period this year.
“If it means that central banks are directly underwriting government bonds, or managing monetary and fiscal policies as one, that would be prohibited in Japan as well as other advanced economies, as lessons from history tell us”, he said.
The BoE is expected to cut interest rates and possibly announce more stimulus measures on August 4.
Economic data available in the autumn would allow London to “to reach a proper conclusion as to whether a fiscal stimulus is required”, he said.
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Lew underscored the need to use all policy tools, including fiscal and monetary policies as well as structural reforms, to shore up global economic growth, the USA officials said.
