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G7 panel calls for change in global economic governance ahead of G20 and Cop26

·3-min read

The G7 economic resilience panel has called for significant change in economic governance to better prepare global economies for the next crisis.

Under the UK’s presidency of the G7, Prime Minister Boris Johnson appointed Lord Sedwill, former cabinet secretary and national security adviser, as the chairman of an independent G7 panel on economic resilience.

The panel, consisting of eight experts appointed by G7 leaders, was asked to report on challenges to the global economic system and for an assessment of policiess to strengthen resilience against future shocks.

Lord Sedwill presented the panel’s initial set of recommendations to the G7 at a summit in Cornwall in June and this latest report aims to inform discussions at the upcoming G20 leaders’ summit and the Cop26 climate talks in Glasgow.

Lord Sedwill, chair of an independent G7 panel on Economic Resilience (House of Commons)
Lord Sedwill (House of Commons/PA)

The key recommendations from the panel include:

– Driving international and domestic investment in economic resilience to deliver the new infrastructure and research required to respond to the challenges of the coming decade.

– Ensuring that international trade rules enable the green transition, by demonstrating leadership by the G7 and allies through smaller agreements and alliances within the World Trade Organisation membership

– Committing to information sharing, traceability and environmental, social and governance standards reform for minerals critical to the green transition.

Lord Sedwill said: “Globalisation has seen the greatest increase in prosperity and reduction in poverty in human history. But the fourth industrial revolution, the rise of China and environmental, economic and geo-political events have outpaced global economic governance.

“Economic resilience is delivered by diversification, co-dependence and public-private partnerships within well-governed, open and integrated global markets.

“The ‘Cornwall consensus’ reflects that insight and recommends investment, standards and inclusive governance to meet the challenges and opportunities of the mid-21st century.”

The report says climate change, biodiversity loss and the next health crisis are poised to destabilise domestic and global economies.

It adds: “Preparing for the next crisis requires a fundamentally different approach to economic policy and international collaboration. The 2020s are a critical decade for building economic resilience.

“With the first in-person meetings of G7 and G20 leaders since the pandemic began, we have the opportunity to learn multiple lessons from each other’s responses to the associated shocks.”

Panel member Thomas Wieser, former president of the Euro Working Group and the European Financial Committee, said: “The European Union has weathered the pandemic comparatively well, but it has been a wake-up call: internal and external disruptions to established ways of living, trading, travelling and producing have shown the fragility of national and global systems.

“The recommendations of our G7 panel on economic resilience provide a clear road map towards a new socially and ecologically responsible way of global co-operation and governance of open societies.”

Another panel member, Professor Thomas Philippon, economic adviser to French President Emmanuel Macron, added: “The free-market, pro-growth ideas that constituted the ‘Washington consensus’ contained much wisdom, but the challenges ahead of us – from climate change to global health – require a set of new principles to guide policy makers and foster the common good.

“The ‘Cornwall consensus’ is our contribution to this ongoing effort.”

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