Creon Butler

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10 Downing Street in London, United Kingdom as seen on 05 September 2022 as Liz Truss was announced as the UK's next prime minister. Photo: Rasid Necati Aslim/Anadolu Agency/Getty Images.

It says something of the UK that the incoming prime minister has ordered a rewrite of British foreign policy barely 18 months after the last one was published.

Liz Truss, who has become the fourth prime minister in Downing Street in six turbulent years, is not prone to risk aversion or offering bland reassurances. She made clear during the campaign for the Conservative leadership that she wants the 2021 Integrated Review redrawn with a far greater focus on combating the ‘growing malign influence’ of Russia and China. She has also pledged to increase defence spending from its current 2.1 per cent of GDP, to 2.7 per cent, and then to 3 per cent by 2030, which will include more support for the intelligence services and cyber security, a further £10 billion overall at a time when public finances are in dire straits.…  Seguir leyendo »

The World Health Organisation (WHO) supervise the arrival of coronavirus vaccines at Khartoum airport in Sudan through COVAX, a UN-led initiative to help poorer countries. Photo by ASHRAF SHAZLY/AFP via Getty Images.

Although the COVID-19 response saw remarkable institutional innovations focused on controlling the pandemic once it had begun – notably the Access to COVID-19 Tools Accelerator (ACT-A) with its vaccine arm COVAX – the pandemic still frustratingly demonstrated once more the enormous costs of failing to invest adequately in prevention and control measures and other global health activities to protect the world.

The sad reality is that despite an overwhelming humanitarian and financial case for fully funding ongoing international measures against COVID-19 as well as longer-term measures to prepare for and prevent future pandemics, the international community has so far failed to mobilize the level and breadth of political commitment needed.…  Seguir leyendo »

Chinese president Xi Jinping delivers his speech during the November 2021 China-Africa Cooperation (FOCAC) meeting in Dakar, Senegal, pledging to offer one billion COVID-19 vaccine doses to Africa. Photo by SEYLLOU/AFP via Getty Imag

More than 20 low-income African countries were in debt distress or at risk of debt distress in autumn 2021 according to the International Monetary Fund (IMF).

The good news is that while overall debt levels have generally risen, action requested by African governments from development finance institutions (DFIs) and multilateral lenders has meant many African countries have been able to support their economies without taking on too much additional private debt.

The IMF has also allocated Africa $33 billion in special drawing rights (SDRs), providing an immediate liquidity boost without adding to the debt portfolio.

At the same time, the G20’s short-term crisis management tool – the Debt Service Suspension Initiative (DSSI) – has just ended and its intended replacement – the ‘Common Framework for Debt Treatment beyond the DSSI’ – has been implemented far more slowly than originally envisaged with only Chad, Ethiopia and Zambia engaging with it so far.…  Seguir leyendo »

UK prime minister Boris Johnson visits the Colosseum during the 2021 G20 summit in Rome, Italy. Photo by Jeff J Mitchell/Getty Images.

Success at Glasgow depends on bridging fault lines

Renata Dwan

The G20 summit’s lack of progress on climate highlights the scale of the challenge – and the stakes – for COP26.  The countries responsible for 80 per cent of global emissions recognized but failed to agree concrete action to limit global warming to 1.5C.

The leaders’ gathering reveals multilateralism’s fault lines. One is the tension between domestic politics and international priorities, reflected in the lack of ambition to reduce coal dependency.  The second is the tension between industrialized and developing states over responsibility for delivering global goods.

The G20 failed to endorse the G7’s pledge to achieve net zero emissions by 2050 or to accelerate the mobilization of previously agreed climate financing.…  Seguir leyendo »

Using boats to travel across a newly-flooded water area caused by an overflow of Lake Victoria in Kisumu, Kenya. Photo by BRIAN ONGORO/AFP via Getty Images.

Developing countries need external finance on a large scale to meet the sustainable development goals (SDGs), and the COVID-19 pandemic has not only increased the amount they need but also made it harder to access private funding.

This makes public development banks more important than ever, especially to catalyse investments by pension funds and other institutions in socially productive assets.

But to achieve this, they urgently need to address a long-standing blind spot by giving much greater weight to helping developing countries access the risk management tools necessary to protect their finances against global shocks.

Climate change and the increased incidence of pandemics make shocks affecting critical economic sectors, such as commodities and tourism, or the availability of international finance, more likely.…  Seguir leyendo »

President Richard Nixon and Treasury Secretary John Connally discuss new economic programmes for the United States at Camp David in Maryland, 1971. Photo by PhotoQuest/Getty Images.

US president Richard Nixon shocked the world 50 years ago by suspending the convertibility of the US dollar into gold and threatening trade restrictions unless other countries agreed to adjust their exchange rates to the advantage of US exporters.

A highly radical move born out of frustration with close allies and leading trade partners, it overturned structures the US had established at Bretton Woods in 1944 and was designed to shift the onus of adjustment in the pegged exchange rate system from deficit countries to surplus countries.

In effect, Nixon threatened a return to trade protectionism unless West Germany and Japan, among others, increased the value of their own currencies against the US dollar.…  Seguir leyendo »

A British one pound sterling coin, a one euro coin and a US quarter dollar coin. Photo by DANIEL SORABJI/AFP via Getty Images.

As well as being a human tragedy, the COVID-19 pandemic has been an unprecedented economic shock for the world economy. Global output is estimated by the IMF to have fallen by 3.5 per cent in 2020, and all countries – big and small, rich and poor – have been hit.

There is now an increasingly clear route to bring the immediate crisis to an end by relying on a mass vaccination programme unprecedented in speed and scale. But implementation remains complex and risky, while the long-term consequences of the pandemic – impacts on health, acquisition of skills, and the accelerated spread of technology – remain highly uncertain.…  Seguir leyendo »

An almost empty British Airways passenger plane flies from Milan to London. Photo by Laurel Chor/Getty Images.

Lockdowns are being eased in many countries, but from different starting points in terms of prevalence of the virus, and with different near-term trade-offs between protecting life and easing constraints on economic activity.

The pressure to ease is understandable. The IMF estimates $10tn has been spent so far on official support measures worldwide, and forecasts global GDP will contract by an unprecedented 4.9% in 2020.

However, the WHO director general, Dr Tedros Adhanom Ghebreyesus, recently insisted that there is an ‘urgent responsibility to do everything we can with the tools we have now to suppress transmission and save lives’, even as research into vaccines and therapeutics continues.…  Seguir leyendo »

Performing a ribbon dance in Hankou Park, Wuhan on the same day as China warns its huge economy will suffer an immense hit from coronavirus. Photo by HECTOR RETAMAL/AFP via Getty Images.

Many countries are beginning to ease the lockdowns and re-open their economies. But, even if this process succeeds globally, most countries are facing a sharp increase in their current fiscal deficits and public debt. The IMF estimates advanced country fiscal deficits will average 11% of GDP in 2020, while debt to GDP ratios will rise from an average of 105% in 2019 to 122% in 2020.

In the aftermath of the 2008 global financial crisis, many governments focused on what maximum debt to GDP ratio would be ‘safe’ to protect them from loss of confidence in financial markets – although different considerations applied in the US as the dollar is the global reserve currency.…  Seguir leyendo »

Chain wrapped around the door of a Saks Fifth Avenue Inc. store in San Francisco, California, during the COVID-19 crisis. Photo by David Paul Morris/Bloomberg via Getty Images

With the IMF forecasting a 6.1% fall in advanced economy GDP in 2020 and world trade expected to contract by 11%, there is intense focus on the question of how and when to re-open economies currently in lockdown.

But no ‘opening up’ plan has a chance of succeeding unless it commands the confidence of all the main actors in the economy – employees, consumers, firms, investors and local authorities.

Without public confidence, these groups may follow official guidance only sporadically; consumers will preserve cash rather than spend it on goods and services; employees will delay returning to work wherever possible; businesses will face worsening bottlenecks as some parts of the economy open up while key suppliers remain closed; and firms will continue to delay many discretionary investment and hiring decisions.…  Seguir leyendo »

A currency dealer wearing a face mask monitors exchange rates in front of a screen showing South Korea's benchmark stock index in Seoul on March 13, 2020. Photo by JUNG YEON-JE/AFP via Getty Images.

An infectious disease outbreak has long been a top national security risk in several countries, but the speed and extent of Covid-19’s spread and the scale of its social and economic impact has come as an enormous and deeply worrying shock.

This pandemic is not just a global medical and economic emergency. It could also prove a decisive make-or-break point for today’s system of global political and economic cooperation.

This system was built up painstakingly after 1945 as a response to the beggar-thy-neighbour economic policies of the 1930s which led to the Second World War. But it has been seriously weakened recently as the US and China have entered a more overt phase of strategic competition, and as they and a number of the other most important global and regional players have pursued their narrowly defined self-interest.…  Seguir leyendo »

A pedestrian wearing a face mask walks past stock prices in Tokyo on 25 February. Photo: Getty Images.

Epidemics, of the size of Covid-19, have huge economic impacts – not just from the costs of managing the health of people, but stopping them, and keeping the economy working. The 10% fall in global stock markets since it became clear that Covid-19 would not be limited to China has boldly highlighted this.

Suppressing the epidemic, but allowing the economy to still function, requires key decisions, in which central banks and finance ministries play a part.

The role of fiscal and monetary authorities in managing an epidemic economy

The scope to use monetary policy to manage the economic impact of Covid-19 is limited.…  Seguir leyendo »