Three things to look out for at this weekend’s G20 summit

1.  Can Europe be spurred into action?

There have been growing calls internationally for further QE in the Eurozone, with the IMF, the US treasury and indeed a part of the ECB advocating a policy that would see Germany loosen the purse strings. The Eurozone showed growth of just 0.6 % in Q3. Persistent uncertainty in the area is now being seen as a drag on global growth, yet, thus far, Angela Merkel´s government have been steadfast in their dedication to “fiscal prudence” and balanced budgets. This has been manifest in the application of the stringent  banking capitalisation requirements which have been measured during the ECB´s recent stress tests. The question now is how to banks meet these requirements while also improving credit lending conditions within the EU.

Concerns about Europe´s plight will play a prominent role at the summit, and leaders will be hoping Merkel may soften her stance surrounding current policy planning on an EU wide basis. However, the German chancellor is currently running a popularity rating of 74 %, her highest rating since 2007, an indication that her policies have widespread support amongst the German electorate.

 

2. Progress on climate change?

The timing of an agreement announced this week between the US and China at the APEC has thrown the issue of carbon emissions back into the international spotlight. The US appear keen to bring the issue of climate control to the top of the agenda in Brisbane, but the Australian government stance on fossil fuels may hamper such aspirations. Prime Minister Tony Abbot´s rather glib assertion that he was “not focussing on what might happen 16 years from now” shows how hard the US government will have to push to make any progress on the issue.

 

3. Taxation policy

Last week´s Luxembourg leaks-which showed the country´s government had facilitated industrial scale tax avoidance– was a cause of severe embarrassment for new European Commission President, Jean Claude Juncker, who was finance minister and prime minister of Luxembourg during the period when the deals were facilitated.

A growing international consensus surrounding the issue of taxation of multinational corporations has been building over the past number of months. EU anti-trust investigations into Apple and Google have shown that the crackdown on global corporations is gathering pace.

Expect further movement on the issue this weekend, as governments try to move closer to a harmonised tax code. It is estimated that corporate tax avoidance costs global GDP between $ 8TN-$20 TN annually. The Australian Prime Minister has used the run up to the summit to describe the practice of paying tax in alternate jurisdictions as “theft”.