The deal struck on tax understandably grabbed most of the attention at the G7 Finance Ministers’ meeting, ahead of this week’s Leaders’ Summit in Cornwall.
This should transform the international tax treatment of multinationals, tax havens, and low tax jurisdictions. But perhaps the most important decision right now, across the world, is how to manage the withdrawal of the massive pandemic economic support packages.
And that is why the economic intervention of the US at this meeting and at the upcoming Cornwall summit is of considerable importance. The message from Treasury Secretary Janet Yellen here in London – which will be echoed by US President Joe Biden in Cornwall – is that all G7 nations, including the UK, should not even be talking about withdrawal of support.
The Biden administration approach is defined, I understand, by the President’s concern that after the 2008 financial crisis, President Obama compromised too much on the size of the economic rescue package. Others point to the possibility that Mr. Biden is acting as he may only do the job for one term, so is choosing to go very big indeed, very quickly.
This sets a very interesting tone for the rest of the world, including the UK. And while the pandemic rescue is the immediate priority, and climate change the long-term strategic aim, the timing and pace of the withdrawal of crisis financial support is right now the most important judgment call, with significant implications for millions of livelihoods.