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Global supply chains and net zero to dominate G7 talks

Global supply chains and net zero front and centre in G7 talks
UK chancellor Rishi Sunak: 'Global cooperation is key to addressing our shared challenges as we emerge from the pandemic.' Photo: Oli Scarff/AFP via Getty

The resilience of global supply chains and net zero are set to be focal points of G7 discussions on Wednesday, as UK chancellor Rishi Sunak heads to Washington to meet with the group's finance ministers.

Sunak will attend a meeting of G20 finance ministers and chair the final in-person meeting of the G7’s finance ministers under the UK’s presidency.

In his G20 intervention, Sunak is set to reiterate the importance of continued vaccine rollouts across the globe, and urge coordinated action and ambitious emissions reduction targets from the whole G20 to support the transition to net zero.

Chairing the G7 finance ministers, Sunak will call for coordination in action on global supply chain issues, and encourage further support for vulnerable countries.

“Global cooperation is key to addressing our shared challenges as we emerge from the pandemic," Sunak said in a statement released by the Treasury.

Read more: Sunak faces making £2bn of spending cuts, says IFS

"From global tax reform to global supply chains, we must work together to seek international solutions for the benefit of our citizens at home.”

The Treasury said that Sunak will urge G7 finance ministers to boost their support for vulnerable countries, particularly through channeling Special Drawing Rights, which is a type of international reserve asset issued by the International Monetary Fund.

Following the $650bn allocation in August to boost global liquidity, Sunak will encourage finance ministers from across the G7 and G20 to contribute towards the International Monetary Fund’s (IMF) Poverty Reduction and Growth Trust (PRGT), which provides zero interest loans to vulnerable countries who need financial support.

Sunak's calls come following the government's decision to cut spending on foreign aid which set in in July, and led to warnings from aid agencies and opposition from MPs, including some Conservatives.

This year, the UK's annual aid budget was reduced to 0.5% of national income. It had been at 0.7% since 2015 and this figure was a "commitment" in the 2019 Conservative manifesto. The difference between the two figures is around £4bn.

Read more: Expectations grow of a UK interest rate hike before Christmas

The government said at the time that the reduction is temporary and will reverse it but only when certain conditions are met.

Other measures Sunak will call for on his G7 visit include commitments to steps to mitigate climate change and urge coordinated action to reduce emissions as the world transitions to net zero.

Building on the historic global tax agreement achieved on Friday, Sunak is expected to also reiterate the importance of global cooperation to create global economies and tax systems fit for the modern age.

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