G20 says global recovery weaker, prepared for impact of Brexit

The Group of 20 finance ministers and central bankers expressed concern on Saturday about the impact of Britain's exit from the European Union and the attempted coup in Turkey, but pushed ahead their focus on more equitable global tax systems.

A draft of the G20 communique obtained by dpa says that "the global economic recovery continues, but remains weaker than desirable."

"The outcome of the referendum on the UK's membership of the EU adds to the uncertainty in the global economy," the draft says, but adds that the world's leading economies were "well positioned to proactively address the potential economic and financial consequences stemming from" Brexit.

The ministers and central bankers are holding a two-day meeting in Chengdu, the capital of south-western China's Sichuan province. 

Earlier in the day, they said taxation policies should be improved worldwide to reflect globalization and promote socially balanced, sustainable economic growth. 

US Treasury Secretary Jack Lew said that not only specific tax rules but entire "taxation administrations [based on national boundaries] have to be updated."

"Changing business models have a serious impact," Lew said, pointing to cross border trade and current opportunities for tax avoidance. "We need to make sure that we determine clearly where value adding is taking place."

The secretary general of the Organization for Economic Cooperation and Development, Angel Gurria, called for a socially equitable tax system.

"We must consider the impact of taxes on the welfare of the people ... Stronger global trade should not lead to more inequality," Gurria said.  

Without referring to developments in Turkey or Britain, International Monetary Fund (IMF) chief Christine Lagarde said she agreed tax policy should be part of reforms led by G20 members, but also raised concerns that "sluggish growth is under threat from other political events." 

The world economy is at a "critical juncture" where the impact of the financial crisis is still unfolding, said Chinese Finance Minister Lou Jiwei, who also called on the G20 to play a leading role in supporting a new international tax system. 

It was the first time Beijing publicly called for reforms in international tax, according to the official Xinhua news agency. 

China will host the 2016 G20 summit in the eastern city of Hangzhou from September 4-5, which will be themed, "Building an innovative, invigorated, interconnected and inclusive world economy." 

Last update: Sat, 23/07/2016 - 15:50
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