G20 will use "all policy tools" to protect growth

chika ebuzor

July 24, 2016 12:54 PM

Data on Friday seemed to bear out fears, with a British business activity index posting its biggest drop in its 20-year history.

The Union Jack (bottom) and the European Union flag are seen flying, at the border of Gibraltar with Spain, in the British overseas territory of Gibraltar, historically claimed by Spain, June 27, 2016, after Britain voted to leave the European Union in the EU Brexit referendum. REUTERS/Jon Nazca

Leaders from the world's biggest economies are poised on Sunday to renew their commitments to support global growth and better coordinate actions in the face of uncertainty over Britain's decision to leave the European Union and growing protectionism.

The meeting of finance ministers and central bankers from the Group of 20 major economies in China's southwestern city of Chengdu is the first of its kind since last month's Brexit vote and a debut for Britain's new finance minister. Philip Hammond faced questions about how quickly the UK planned to move ahead with formal negotiations to leave the EU.

"We are taking actions to foster confidence and support growth," a draft statement by the policymakers seen by Reuters said.

"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 and balanced growth," it said.

The International Monetary Fund this week cut its global growth forecasts because of the Brexit vote.

The draft communique, expected to be issued at the end of the meeting on Sunday afternoon, said Brexit added to uncertainty in the global economy but G20 members were "well positioned to proactively address the potential economic and financial consequences".

U.S. Treasury Secretary Jack Lew said on Saturday it was important for G20 countries to boost shared growth using all policy tools, including monetary and fiscal policies as well as structural reforms, to boost efficiency.

"This is a time when it is important for all of us to redouble our efforts to use all of the policy tools that we have to boost shared growth," Lew told reporters.

The spectre of protectionism, highlighted not only by Brexit but also by U.S. Republican presidential candidate Donald Trump's "America First" rhetoric and talk of pulling out of trade agreements, also hangs over the two-day meeting.

"Not only Brexit but various risks of low growth remain, and there was a lot of debate on the need of monitoring developments including terrorism, geopolitical risks and refugees," said a Japanese finance ministry official.

"A lot of concerns were voiced over spreading measures for protectionism."

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chika ebuzor