Good words but not major action at the G7

This week’s three-day meeting of the G7 group of countries in Cornwall on Britain’s southwest coast was strikingly different in character to recent precedents. At earlier meetings of the group, the gulf between the participants on some crucial issues seemed wider than the Atlantic. The 2019 summit ended without a joint statement because of the inability of members of the G7 group to reach a consensus on any major issue of concern to world trade. This was in remarkable contrast to this week’s meeting, where the participants agreed on various common commitments.

The G7 dates to the height of the Cold War. Its purpose then was to coordinate policies towards the former Soviet Union and the Eastern bloc and to promote economic cooperation and joint action to offset the effects of recession, rampant inflation, and skyrocketing oil prices after the oil embargo that the oil-producing group of countries in OPEC declared during the 1973 Arab-Israeli War. The G7 started in 1975 with six members, namely the US, France, the UK, Japan, Italy, and West Germany. Canada joined the following year, and the EU began to participate in meetings in 1981.  

At the time the group was founded, its members, described as the world’s major industrialised countries, controlled more than 70 per cent of the global economy. That figure has now shrunk to 45 per cent due to the rising shares of China, India, and other countries of the South and the emerging markets. In terms of purchasing power, the G7 group of countries’ share of global production is now only around 30 per cent. Although they are still described as industrial, the industrial sector’s contribution to their economies has steadily declined — to only 19 per cent in the case of the UK, the host country of this year’s G7 summit.

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