Trade deals

• Leaders’ summit. The G7 leaders meet this weekend in Cornwall. E3G outlines the three key tests for success - vaccine solidarity, finance solidarity, and green recovery at home.
• ~~UK aid budget cuts threaten climate agreements.Gordon Brown wrote to the Times warning Boris Johnson that COP26 could fail due to cuts to the UK’s overseas development assistance budget. Climate mitigation finance from richer countries to poorer countries will be the leverage point for the talks and the cut has already harmed the UK’s international reputation. A group of Conservative MPs aimed to challenge the cuts to foreign aid on Monday, but the amendment was ruled as “not in scope” of the Advanced Research and Innovation Agency Bill.
  

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• Historic deal secured for a global minimum corporation tax.This past weekend, G7 finance ministers agreed in principle to a global minimum corporate tax rate of 15%, marking major progress in the taxation of multinational companies.
• ~~Could the rate be higher? Lord Nicolas Stern and others at the Grantham Research Institute wrote the independent report requested by the PM for the G7, which recommended a higher minimum rate of 21%. Research by Demos found that tax directors at large businesses with UK operations supported the 21% rate. (See also: video response from the Tax Justice Network chief exec Alex Cobham.)
• ~~Potential loopholes. “Pillar one” of the agreement will only apply to companies with at least a 10% profit margin, with 20% of profit above that reallocated proportionate to where the company operates. This criterion has been criticised by experts as “inappropriate” as it could exclude large and undertaxed companies like Amazon. Tax Research UK’s Richard Murphy outlines the important remaining questions for civil society.
• ~~Podcast. Taxcast host Naomi Fowler and campaigner Djaffar Shalchi covered Biden’s tax plans, alongside Shalchi’s campaign for a 1% wealth tax. (Episode here)
  

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• Ranking green recovery spending in the G7. The TUC ranked the green recovery plans of all G7 countries, finding that the UK came in 6th with the Treasury investing 6% of that pledged by the US and 13% of that promised by Italy on green jobs and recovery (£180 invested per person compared to £2,960 in the US and £1,390 in Italy). (Twitter thread summary)
• ~~Jobs potential. The TUC’s analysis estimates current UK green infrastructure investment potentially creating 44,000 green jobs over the next ten years. This could increase to 721,000 green jobs over the next ten years if the UK matched the ambition set by the US.

• English federalism. Through a detailed history of regional inequality and English devolution, Neil McInroy argued that levelling up will require constitutional change, rather than “top-down tinkering” characterised by the government’s present approach.
• ~~Devolve, redirect, democratise. The article accompanies a new policy provocation from CLES staff on the future of local economic development in the UK, providing “a brief history as to how the UK has consistently failed to address… disparities in economic and social conditions and proposes three central tenets to reshape local economic development in the UK… devolve, redirect, democratise”.

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• Democratic ownership in the gig economy. Autonomy has released a new report on food delivery cooperatives as alternatives to the existing platform model and a ‘how to’ guide for setting up a food delivery cooperative, in collaboration with CoopCycle and Cooperatives UK.
  

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• Progressive procurement. Making Spend Matter, a network of 7 cities exploring best practice in progressive procurement, released their final newsletter detailing their 3 year journey of sharing learning from partner cities across Europe.
  

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• Community Wealth Fund. A group of civil society, public and private sector organisations formed the Community Wealth Fund Alliance, a campaign calling for “long-term, community-led investment in the neighbourhoods that need it most”.
  

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• Community Building for Systems Change. Finance Innovation Lab released a reflection paper exploring how and why community building can be an effective strategy for systems change. (WeAll summarised takeaways from the report in a Twitter thread)
  

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• Urban economy navigator. Harvard University’s Growth Lab released Metroverse, a data visualisation tool comparing the local economies of different cities. The Working Class Economists Group’s Niall Glynn produced a short Twitter thread illustrating Manchester’s economy using the tool.

• Climate neutral central banking. The Grantham Institute produced a policy report arguing for every bank in the European System of Central Banks to adopt net-zero strategies, and explaining how to green their prudential and monetary policy.
  

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• CBI outlines new economic strategy. Tony Danker, head of the CBI, unveiled a ‘net zero-focused economic strategy’ outlining how businesses can transform the economy, build social solidarity and an inclusive economy, and more.

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• ESG critique. Economist Daniela Gabor appeared on Bloomberg’s Odd Lots podcast to talk about the drawbacks of the ESG boom and the use of Public-Private Partnerships in pursuing climate goals. Gabor reinforced the role of public investment over a private-sector-led green transition in an article for the Guardian.
  

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• 4-day week to save the planet. The Four Day Week campaign published a new study finding that a four day week with no loss in pay could cut UK emissions by 21%. Emilie Tricarico commented on this research in a post for the Rapid Transition Alliance, calling for a ‘green jobs revolution’.

• Environmental impact of UK financial sector. New analysis of the financial sector’s environmental footprint from WWF and Greenpeace found the City of London would be the 9th biggest emitter of CO2 in the world if it were a country.
  

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• The problem with rating agencies… again. A working paper from Bennett Institute outlines a “fundamental challenge” within the policy enthusiasm for ‘greening the financial system’: “Markets need credible, digestible information on how climate change translates into material risks. Instead, an explosion of environmental, social and governance (ESG) ratings and voluntary, ad hoc, unregulated corporate climate disclosures has created a confusing world of unfamiliar, incomparable, and conflicting metrics.“

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• Community development finance institutions. Finance Innovation Lab’s Jesse Griffiths explained the alternatives available in a short video on purpose-driven finance: community development finance institutions.

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• Financial crisis in the 2020s. Robert H. Wade wrote for LSEs’ blog outlining the reasons why there may be another financial crash before 2024: “In short, the world economy now (1) carries explosive levels of debt, and (2) is in a debt trap (central banks have to be very careful how fast they raise interest rates)”.

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• EU corporate debt overhang. An article for Geoeconomics pointed to the likelihood of central banks in Europe intervening to avoid “zombification of the corporate sector”.

• US labour ‘shortage’. There is a growing debate in the US about a labour ‘shortage’, with firms reporting difficulties hiring for new roles. US Chambers of Commerce are pointing to “enhanced government unemployment benefits” as reasons for the labour shortage, but research from the Groundwork Collaborative found that the top reason why job hunters rejected a job was due to low salary (36%), concerns about Covid-19 (35%) or caring requirements at home (31%).
• ~~An intentional strategy to boost pay. Recent economic speeches from Joe Biden have emphasised the need to create “tight” labour markets so employers are competing for workers and wages rise at the expense of profits. Economist JW Mason explains the paradigmatic significance of this strategy in a Twitter thread.
• ~~A ‘high pressure’ economy. Economist and development theorist Cedric Durand further explained the intentionality of this strategy in an article for New Left Review, stating “the scale of the Administration’s public spending is deliberately designed to generate a high-pressure economy, which necessarily involves an element of inflationary risk. It is on this point that 2021 can be considered a 1979 coup in reverse.”
• ~~Inflation concerns. Martin Wolf wrote on his concerns for inflation in the US given the Fed’s ‘outcome-based’ (as opposed to ‘forecast-based’) policy.
  

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• New resources on low pay. See the IPPR’s report on the rise in working poverty and the need to fix our social security system (ITV coverage/Twitter thread summary). The Resolution Foundation’s Low Pay Britain 2021 looks at the impact of Covid-19 on poorly-paid workers and explores whether a recovery may improve both pay and job quality.
• ~~Public attitudes on welfare. The Fabian Society’s year-long study of public attitudes to welfare used surveys and a citizen’s jury to identify “consensus support for £10bn of extra payments on top of the £7bn cost of retaining the £20-a-week universal credit boost”.

• Cuts aren’t needed. NEF’s Dominic Caddick explains why the Government’s recent austere decisions - e.g. cutting foreign aid spending; committing only £1.4bn to catch-up spending for pupils, less than 10% the £15bn recommended by their own education recovery tsar - are not needed to pay back pandemic debt. (NEF blog)
• ~~ONS public finances. ICMYI, see also this Twitter thread from NEF’s Frank van Lerven on five reasons we shouldn’t be concerned by the ONS’s recent public finance figures.
• ~~BBC view. Economics correspondent Andy Verity argues: “that government finances are entirely unlike household finances. Therefore dubious statements about what the government ‘can’t afford’ are political judgments dressed up as economic ones”.
  

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• The Treasury View. The New Statesman’s Stephen Bush writes on how the planned Tory rebellion over foreign aid cuts is worrying the Treasury, as it casts into doubt the political feasibility of delivering the £17bn in cuts promised in the March Budget.
• ~~Background. See Ben Chu’s Twitter thread from March on how that Budget implied austerity for public services.
  

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• But what if interest rates rise? The Economist argues that Sunak should not worry about the prospect of an interest rate rise raising borrowing costs because of the maturity of UK debt.