Pound wobbles as trade row engulfs start of G7 summit in Cornwall
After a show of strength over recent months, the pound wobbles on the eve of the G7 summit, and although it’s likely to avoid a precipice, issues being debated at the top of the Cornish cliffs this weekend, risk another decline, according to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown in London.
“While sausages are highly unlikely to be on the fine dining menu G7 leaders sit down to, they have already sparked a high-level trade row and a fresh fall in sterling,” Streeter said this afternoon.
“The UK stands accused of inflaming tensions by indicating it may refuse to carry out checks on goods like meat between the UK and Northern Ireland under a timetable agreed with the EU,” she added.
Behind the scenes manoeuvring to calm simmering tempers on both sides is clearly what is needed, to avoid further escalation, she continued, but with so much else on the agenda such a breakthrough may prove elusive.
Action on climate change is headlining the summit, amid calls for leaders to force companies to disclose their impact on the environment and expectations of a detailed plan to implement the Paris emissions targets.
“Leaders are coming under increasing scrutiny to ensure they don’t just talk the talk but walk the walk when it comes to pursuing strategies which claim to be environmentally friendly,” Streeter noted.
“It’s no longer acceptable to simply do no more harm, there is now an expectation for governments and businesses to rapidly implement policies which will lead to a sharp reduction in carbon emissions, given the scale of the mountain to climb,” she added.
With the UK’s hosting of COP 26 approaching rapidly, it will be crucial for Boris Johnson to emerge from Cornwall with definite agreements and not endless pledges.
A statement from G7 leaders on their view of the world economy and stimulus policies aimed at recovery from Covid could be another key indicator for the direction of financial markets next week.
“Although the G7 has announced an agreement, billed as historic, to tackle tax abuses by multinationals, there is still plenty of wiggle room in the deal. Giants like Amazon under the current proposal could be exempt, as they don’t meet the profit threshold,” Streeter explained.
“Even so there is likely to be a strong unanimous statement of support to try and build momentum for the deal to be extended to the G20 group of nations,” she stressed.
There may also be an update from the World Health Organisation on possible next steps in relation to investigations into the origins of Covid, which could potentially lead to a fresh stand-off between the US and China.
“All in all, we could be in for a very eventful summit on the rugged coast of Britain’s southernmost county,” Streeter concluded.