Britain’s vote to leave the European Union heightens risks for the world economy, finance chiefs from the G20 group of leading countries said on Sunday, vowing to use “all policy tools” to boost growth.
The outcome of June’s referendum “adds to the uncertainty in the global economy”, they said in a communique after a meeting of central bankers and ministers in the Chinese city of Chengdu.
But they insisted that G20 countries were “well positioned to proactively address the potential economic and financial consequences” of the vote, adding: “In the future, we hope to see the UK as a close partner of the EU.”
“In light of recent developments, we reiterate our determination to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth,” said the communique, repeating a pledge from an earlier meeting in Shanghai in February.
But it called for “inclusive growth” to bring in those left out of economic prosperity.
Fiscally rigorous Germany in particular is reluctant to endorse the use of government spending to boost growth, seeing it as ineffective.
“It would be a mistake to think about the choice of tools as being either/or when it comes to structural reforms or using fiscal space,” said US Treasury Secretary Jacob Lew. “The two go hand-in-glove.”