Beyond COvid: The Digest

Economics on the international stage

October 19, 2020
SUMMARY
  • Our In Focus section this week analyses last week's meetings of the World Bank, IMF and G20.
  • Read our In Brief and Reflections sections for the latest research and analysis around economic recovery and reform Beyond Covid.
  • To get in touch with feedback or suggestions for next week's Digest, email Michael on michael@beyond-covid.org.

In Focus: Economics on the International Stage

  • Last week saw the International Monetary Fund (IMF) and World Bank Group Annual Meetings and the last meeting of G20 finance ministers and central bankers this year, marking an important week for economic policy on the international stage.
  • ~~The Bretton Woods Project aggregates the latest critical analysis of the World Bank and IMF - see their review of the Annual Meetings here.
  • The end of austerity? Much has been made in recent weeks of the IMF’s supposed turn away from austerity under new Director Kristalina Georgieva, her ‘Lunch with the FT’ being a prominent example of this narrative.
  • ~~Over the weekend, articles from the Financial Times editorial board and its economics correspondent Chris Giles both hailed the “death of austerity”.
  • ~~The FT credits Jeremy Corbyn and Bernie Sanders for helping “swing the political pendulum in favour of more aggressive state intervention in the economy.”
  • A tale of two IMFs. While countries in the Global North are being encouraged to spend on major public investment programmes, a number of organisations have warned that the IMF remains a proponent of austerity in the Global South.
  • ~~Austerity for the poor. 500 leading civil society groups have written to the IMF warning that its support programmes would see “80 countries required to implement austerity worth on average 3.8% of GDP between 2021 and 2023” (Research from Eurodad here).
  • ~~Case study: Ecuador. International Trade Union Confederation (ITUC) economist Lara Merling has written on the gap between the IMF’s progressive rhetoric/research and the austerity imposed on Ecuador (openDemocracy).
  • Rhetoric on debt architecture... World Bank President David Malpass drew attention last week for his speech on “reversing the inequality pandemic”, in which he said that the sovereign debt burden on the world’s poorest countries can function as “the modern equivalent of a debtor’s prison”.
  • ~~The IMF similarly has made calls for “reform of the international debt architecture”.
  • ...but lack of action. Global Justice Now’s Nick Dearden has written for New International outlining why the World Bank and IMF proposals are not enough to avert a debt crisis.
  • ~~Elsewhere in the UN: Dearden profiles UNCTAD’s recent research as an example of an organisation within the UN system that understands the severity of the problem.
  • ~~The grip of finance: Professor Daniela Gabor has written an in-depth critique of the partnership between international financial institutions and G20 countries, arguing that this benefits private finance at the expense of poorer countries’ citizens.
  • ~~Debt Cancellation: The Jubilee Debt Campaign (JDC) has responded to the Annual Meetings with calls for multilateral debt cancellation and research into how this could be funded.
  • ~~VIDEO: UNCTAD’s Richard Kozul-Wright and JDC’s Sarah Jayne Clifton were part of a Beyond Covid Discussion Series in April on the case for sovereign debt cancellation.
  • Green recovery. A group of European ministers have called on the World Bank and IMF to “spearhead a green and inclusive recovery”. UK COP26 President Alok Sharma made similar calls at the Annual Meetings.
  • ~~G20 failure. In 16 of the G20 countries, announced stimulus packages to date will have a net negative impact on the environment according to the latest research from Vivid Economics.
  • ~~Energy Policy Tracker provides a weekly update of G20 public spending on energy as part of Covid-19 recovery packages. Thus far, almost 50% of spending has gone to unconditional support of fossil fuels.
UNCTAD's Richard Kozul-Wright and Jubilee Debt Campaign Director Sarah-Jayne Clifton outline the urgent international economic reform needed to avert a global debt and humanitarian crisis.

In brief

  • Gender/class inequality: The Women’s Budget Group published a new study examining the impact of COVID-19 on working-class women in the UK.
  • Regional lockdown: Greater Manchester Mayor Andy Burnham and other local leaders in the North of England have called for more economic support measures when imposing higher tiers of lockdown.
  • ~~Recent IPPR research argued that the Chancellor’s new job support schemes do not sufficiently support part-time employment over winter, concluding that the schemes “only save 230,000 of these jobs,” with the loss of 1.8 million jobs which could otherwise have been preserved.
  • Green finance: Christine Lagarde, President of the European Central Bank, hinted at using climate risk to steer bond purchases. (Analysis thread from NEF’s Frank van Lerven here.)
  • The cost of brinksmanship: The OECD’s 2020 Economic Survey of the UK grabbed headlines with its warning of the dangers of No Deal (e.g. Guardian).
  • ~~Tax reform: The report also proposed a number of reforms to make the tax system fairer and more efficient (summary thread here).
  • Wealth Tax: An FT survey of 1300 of its readers found majority support for a wealth tax.
  • Hostile environment: An audit of migrant access to NHS care found that migrants in England are denied access for an average of 37 weeks.
  • Green investment: Research carried out by Vivid Economics found that UK Export Finance could support more than 40,000 jobs in the renewables sector annually by 2035, if it were to assume liabilities for renewable exports.
  • Executive pay: “Partners at some of Britain’s wealthiest law practices saw their pay increase to £1 million during the pandemic even as their firms took furlough cash that has yet to be repaid.” (Times)

Reflections

  • “End the Covid gravy train”. Former Cameron speechwriter Clare Foges criticises the millions spent on management consultants and outsourcing, and argues for the need to restore public sector expertise and capacity in her Times column.
  • Green Recovery? Shaun Spiers wrote for the Green Alliance Blog on the discrepancies between the government’s promise on a green recovery and the reality of policies announced so far.
  • Regional inequality: Peter Byrne wrote for The Conversation on how Northern lockdowns shine a light on Britain’s landscape of inequality.
  • ~~See also Lynsey Hanley’s article for the FT, using Liverpool as a lens for analysis of the North-South divide, “managed decline” and the “real red wall”.
  • New entrepreneurship: Mathew Lawrence of Common Wealth wrote for the New Statesman on the need to transform the economy so that it rewards true entrepreneurship, not rent-seeking.
  • Circuit Breaker? Anne Williamson, Scott Sheffield and Anna York wrote for Open Democracy on how a system of planned, intermittent ‘circuit breakers’ would save lives and protect the economy.

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