Do you see consensus emerging on the communique at the ongoing G20 FMCBG (finance ministers and central bank governors) meeting?
Well, I don’t know about that. All I know is that alongside France and many other countries, the UK made strong representations not to water down the language compared to the leaders’ summit in Bali. And I think that the finance minister (Nirmala Sitharaman) is doing a fantastic job diplomatically in trying to get everyone to come together. And I fully support her tremendous efforts. But I’m not sure whether the issue has been resolved yet.
Is there an attempt to water down the Bali declaration language? Which are these countries?
Well, I think I should let you direct your questions to her (Sitharaman). But let me put it this way, the issue seems to have been floated as to whether the language should be watered down. And many countries, including the UK, feel very strongly that on the first anniversary of the (Russia-Ukraine) war, that would be exactly the wrong signal to send.
Purchase of Russian oil is an issue. Do you think the price cap balances all interests?
What the price cap does is it reduces the price that countries like India have to pay. It also reduces the funding that Putin has available to finance his illegal war in Ukraine. I think it’s an important thing to do, but it’s not the only thing. We need to recognise that probably if we are going to change his mind, it won’t just be military pressure it will be economic pressure as well. And if we want the shadow of war in Ukraine to be lifted from the global economy, we have to use all the arrows in our quiver.There are concerns around sovereign debt restructuring, about asset capture by countries and its geopolitical ramifications. Do you see an outcome on it that will balance these concerns?
We were having a lot of discussions about this. This is something that the UK has long wanted to do more on because we think it’s so difficult for countries to develop if they’ve got huge liabilities. I’ve had a number of discussions about making special allowances for people who suffer disasters. But what I would say is none of these issues, whether it’s debt restructuring, climate change funding, poverty alleviation, are going to get the focus they need, unless we bring stability back to global security. Because in the end, countries are going to find they have to spend more on weapons or defence, they’re going to find inflation is higher, supply chains that are compromised, because one country is in the process of trying to invade another. So that’s why I think it’s very appropriate that this G20 meeting was held on the year’s anniversary of the invasion of Ukraine. It allowed us to express those views very, very loud and clear to the Russian delegation in a way that wouldn’t otherwise have happened.
Advanced economies continue to battle high inflation? When do you see the fight ending?
Well, I don’t think we can be complacent. And I think that you can draw the wrong conclusion from the fact that inflation rates have peaked and appear to have peaked in many countries because the key measure is core inflation. That’s the inflation that remains even when you’ve stripped out rises in food and fuel prices, which will naturally stabilise, and there the signs are that it’s still stubbornly high. And so, I think there is still a lot of work to do on inflation. Post-Covid world concerns have grown about a rise in protectionism and deglobalisation? How real are these concerns?
Well, I think the one thing that could turn very challenging global circumstances into a slump, would be if we drew the wrong lessons and retreated into global protectionism. One of the reasons that we are so determined to make sure that Putin does not succeed in his ambitions with respect to Ukraine is because it would be disastrous for global trade if we are back to a world in which countries are worried about being invaded by their neighbour. The reason that there’s been such huge growth in trade in the last 75 years has been that broadly we have had much better global security. So, people have been able to concentrate on growing their economies and trading and we must not turn the clock back. So, I think there are risks with protectionism. And I think it’s a choice we all have to make as to whether we want to turn the clock back. And if we do, we’ll become immensely poor.
Pandemic also triggered shifts in supply chains. How do you see it playing out?
Well, I think, of course, people are thinking more carefully about supply chains because of what Putin did with Ukraine where he tried to use European dependence on energy as a tool of leverage, and he failed. But we are all paying an economic price as a consequence. So, people will think about supply chain risks when it comes to autocratic states. And we all have to be sensible and democracies like India and the UK should work together to mitigate those risks. But we should do so in a way that doesn’t mean we retreat to protectionism where we say that we have to be self-sufficient in absolutely every single thing that we need because we know that will make us all do a lot of work.