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US and Europe in Davos clash over climate crisis

By Ramla Soni

US Treasury secretary Steve Mnuchin said the debate should be about 'environmental issues' rather than climate change

The US and Europe clashed over the threat of global heating during the final session of the World Economic Forum in Davos.

US Treasury secretary Steve Mnuchin said the debate should be about “environmental issues” rather than climate change. He added that the costs were being overestimated and that climate was only one of several concerns that needed to be discussed.

His reactions come after the president of the European Central Bank, Christine Lagarde, said it was important to include climate risks into economic forecasts. Olaf Scholz, Germany’s finance minister, said his country was stepping up its fight to reduce the use of carbon.

“We don’t know how to price these risks and so we are overestimating the costs,” Mnuchin said. “If you want to put taxes on people go ahead and do it, but it will be a tax on hardworking people.”

Mnuchin cited other problems for policymakers to be concerned about: the Coronavirus health emergency, Iran’s nuclear ambitions and the oil prices hitting $120 (£92, €109) a barrel. He also emphasised the need to power development in poor countries.

Mnuchin said technology would be a solution to reducing carbon emissions and that the costs of action would be lower in 10 years time.

Overheated markets, space and trade deals were also on the agenda as the world’s political and business leaders gathered at this year’s event.

US President Donald Trump likened Elon Musk to inventor Thomas Edison, calling the CEO of Tesla and SpaceX one of the world’s “great geniuses”.

Meanwhile, The UK’s priority is to strike a trade deal with the European Union ahead of the US, the country’s Chancellor of the Exchequer Sajid Javid said.

Javid’s comments came after Mnuchin said the US was a “bit disappointed” not to have been able to negotiate with the UK first.

Lagarde also said Britain’s departure from the EU next week had not entirely lifted the threat from Brexit.

“Brexit is a little bit less uncertain, but we still have that possible cliff edge in December of 2020. We don’t know exactly what the trade relationship will be. And it’s a big partner for the euro area, so that’s certainly a question mark,” she said.

The UK is set to leave the EU on January 31, and the government has set a deadline for a trade deal with the EU for the end of 2020.

FURTHER READING: Trump lauds US economy and pledges to plant a trillion trees

FURTHER READING: Markets unmoved as Trump and Han talk up global economy

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