The G20 is approaching a turning point. Established in the aftermath of financial crises as a forum for macroeconomic coordination, it has gradually expanded into a central body for addressing global challenges – from pandemics to climate change and digital transformation. Yet the institutional logic that sustained its earlier effectiveness – consensus-based cooperation among major economies – is increasingly under strain. Diverging geopolitical interests, asymmetric development priorities, and the growing complexity of global risks are rendering the traditional model insufficient.

By the time of the UK G20 Presidency in 2027, these tensions are likely to crystallise. The UK will inherit a forum shaped by successive Global South Presidencies that elevated development, inequality, and climate finance, followed by a US Presidency expected to reassert strategic and technological priorities. The result is not merely a crowded agenda, but a structurally different policy environment. Preparing for this moment requires what may be termed a ‘New G20 Alignment’.

A realigning G20 Presidency

The UK Presidency is likely to position itself as a re-aligner of competing G20 priorities. In practical terms, this implies a dual task: reconciling development-oriented demands from emerging and developing economies with the security, technological, and supply-chain concerns of advanced economies. The challenge is not simply diplomatic; it is institutional. Traditional consensus-based agreements are increasingly difficult to achieve, particularly in areas such as climate finance, debt restructuring, and digital governance.

A central focus is therefore likely to be the integration of climate, finance, and development. The next phase of climate policy is shifting from commitments to implementation, and from public finance to the mobilisation of private capital at scale. This requires redesigning financial systems to internalise environmental risks and to channel investment toward low-carbon and nature-positive transitions. The UK, with its role in global finance and prior experience in climate diplomacy, is well placed to advance this agenda.

A further focus is likely to be the integration of closely interconnected policy domains that have traditionally been addressed in separate policymaking silos, such as environmental sustainability, food security, water security, and energy security. The growing recognition of nexus risks – where shocks in one domain propagate across others – implies that effective policy must be coordinated across these domains rather than pursued in isolation. This reinforces the need for cross-sectoral governance frameworks that align investment, regulation, and risk management across these interdependent systems.

At the same time, digital and AI governance will demand new forms of cooperation. Fragmentation in regulatory approaches – across the US, EU, and other jurisdictions – makes universal agreement unlikely. Progress is more likely to emerge through ‘coalitions of the willing’, focused on specific issues such as AI safety, data standards, and cross-border interoperability. The UK Presidency may therefore seek to institutionalise such coalitional approaches within the G20 framework.

Progress is likely to emerge in supporting coalition-based digital governance among jurisdictions promoting digital consumer empowerment and rule of law. This offers a feasible, impactful pathway for safeguarding digital human rights while sustaining innovation. The UK may support three structural transformations required in response to autonomous AI: the need for continuous data control, supply-chain accountability for compositional AI risks, and coordinated responses to increasing economic and geopolitical concentration.

Underlying these priorities is a broader shift toward what might be termed ‘variable geometry’ governance. Rather than requiring all members to move in lockstep, the G20 is likely to operate increasingly through flexible, issue-specific groupings. This reflects a pragmatic recognition that progress in a heterogeneous and geopolitically contested world often depends on partial rather than universal agreement.

The G20 is well-suited to such a ‘variable geometry governance’ approach, since it has traditionally been supported by a variety of bodies, such as the Finance Track, Sherpa Track, Working Groups, and Engagement Groups. These institutional layers can be recombined in innovative and flexible ways, enabling the G20 to function less as a forum for uniform consensus and more as a platform for coordinated, multi-level policymaking across diverse coalitions.

From consensus to coalitions

These developments point to the first dimension of the New Alignment: a transition from universal consensus to coalition-based governance. The G20’s traditional model – anchored in joint communiqués and shared commitments – assumed a degree of alignment among its members that is no longer present. As Baldwin (2016) and others have noted in the context of globalisation, increasing interdependence has been accompanied by increasing heterogeneity in national interests.

Coalition-based governance offers an alternative. It allows subsets of countries to advance cooperation in specific domains while maintaining an overarching framework for coordination. Such arrangements are already emerging in areas such as climate clubs and digital partnerships. The task for the G20 is to provide a platform where these coalitions can form, interact, and scale.

Managing systemic interdependence

A second dimension of the New Alignment concerns the function of the G20 itself. Originally conceived as a forum for economic coordination – particularly in response to financial crises – it must now address a broader set of systemic risks. Climate change affects financial stability; digital technologies reshape labour markets and geopolitical competition; pandemics disrupt supply chains and fiscal balances. These challenges are deeply interconnected.

As Tooze (2021) has argued, the global economy has become a system of ‘polycrisis’, where shocks propagate across domains. In this context, the G20’s role shifts from coordinating macroeconomic policies to managing systemic interdependence. This requires integrating policy across economic, technological, social, and ecological dimensions, and recognising that interventions in one domain have consequences in others.

Beyond market-centric problem solving

The third dimension of the New Alignment is conceptual. Traditional policy frameworks are grounded in a market-centric view of the economy, where externalities are treated as deviations from an otherwise efficient system. Yet many of today’s challenges are not marginal distortions but systemic features arising from the interaction of economic activity with social and ecological systems.

Recent work in ecological economics and political economy has emphasised the need to move beyond GDP as the primary measure of performance and to consider broader indicators of wellbeing and sustainability (Stiglitz et al. 2019, Dasgupta 2021). The G20’s evolving agenda reflects this shift, as issues such as inequality, social cohesion, and environmental resilience move to the forefront.

The SAGE framework – comprising solidarity (the strength of social cohesion and prosocial relations), agency (people’s capacity to act purposefully and shape their lives), economic gain (material prosperity and productive capacity), and environmental sustainability (the resilience of natural systems) – offers a multidimensional approach to measuring country performance beyond GDP (Lima de Miranda and Snower 2020, 2022). The anticipated priorities of the UK G20 Presidency map naturally onto these dimensions: efforts to bridge geopolitical and developmental divides and strengthen social resilience align with solidarity; initiatives in digital and AI governance, particularly those enhancing data control and participation, advance agency; reforms of financial systems, supply chains, and investment frameworks support economic gain; and the integration of climate, biodiversity, and resource security policies directly promotes environmental sustainability. Policy outcomes within the G20 could therefore be evaluated along these four dimensions, while also being assessed in terms of core components of human flourishing – as highlighted in the Human Flourishing Study – including material wellbeing, health, meaning, relationships, and security. This dual mapping links macro-level policy interventions to micro-level human outcomes, thereby enhancing accountability and enabling more coherent policymaking across interconnected domains.

The need for a new analytical framework

Institutional change on this scale requires conceptual renewal. Policymakers need a framework capable of capturing the complexity of modern economies – one that accounts for multi-level interactions, adaptive dynamics, and the embeddedness of economic activity within social and ecological systems.

The multilevel paradigm (Wilson and Snower 2024, Snower and Wilson 2025) offers such a framework. It conceptualises the economy not as a self-contained mechanism, but as a set of interacting living systems: individuals embedded in groups, groups embedded in societies, and societies embedded in the natural environment. Outcomes emerge from interactions across these levels, shaped by both incentives and norms.

A key insight of this approach is that economic processes are evolutionary. Policies and institutions evolve through variation, selection, and transmission. This has direct implications for governance. Rather than seeking optimal solutions ex ante, policymakers should design systems that enable experimentation, learning, and adaptation. This aligns closely with the emerging emphasis on policy experimentation and iterative learning in global governance (Rodrik 2015).

Moreover, the multilevel paradigm highlights the importance of aligning incentives across levels. Collective challenges such as climate change and financial instability arise when individual and group incentives are misaligned with system-level outcomes. Effective policy must therefore address these misalignments, fostering cooperation and prosocial behaviour.

Policy implications for the G20

Translating this perspective into practice suggests several directions for the G20. First, it points to the need to formalise coalition-based governance within the G20 framework. Rather than viewing plurilateral initiatives as second-best, they should be recognised as core instruments of cooperation in a heterogeneous system.

Second, it underscores the importance of policy experimentation and learning. The G20 can play a role in facilitating the exchange of policy innovations, identifying best practices, and supporting their diffusion across countries. This is particularly relevant in areas such as climate policy, digital regulation, and social protection.

Third, it calls for integrating financial and ecological considerations. Financial systems must be reoriented to account for long-term risks and dependencies, including those related to climate and biodiversity. This involves both regulatory reform and the mobilisation of private capital.

Finally, it suggests the adoption of multidimensional metrics of performance. Frameworks that capture social, economic, and environmental dimensions can provide a more comprehensive basis for policymaking and accountability. Such approaches are increasingly reflected in international initiatives and analytical work by institutions such as the OECD and the World Bank (e.g. OECD 2023, World Bank 2021).

Conclusion

The UK G20 Presidency in 2027 will take place in a context of profound transformation. The shift toward coalition-based governance, the need to manage systemic interdependence, and the move beyond market-centric frameworks all point to a New Alignment in global economic governance.

The multilevel paradigm provides a coherent lens through which to understand and operationalise this transition. By recognising the economy as an adaptive system embedded within broader social and ecological contexts, it offers guidance for designing institutions and policies that are resilient, inclusive, and sustainable.

For the G20, the challenge is not only to adapt its agenda, but to redefine its role. In a fragmented and interdependent world, its effectiveness will depend less on achieving universal consensus and more on enabling coordinated action across diverse actors and levels. The UK Presidency has an opportunity to advance this transformation, positioning the G20 as a platform for managing the complexities of the twenty-first century.

Author’s note: This work is part of The New Alignment initiative led by the Institute for Global Prosperity at University College London.

References

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Dasgupta, P (2021), The Economics of Biodiversity: The Dasgupta Review, HM Treasury.

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Rodrik, D (2015), Economics Rules: The Rights and Wrongs of the Dismal Science, W.W. Norton & Company.

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