Extreme weather, such as droughts in Australia, pose significant risk to growth, IMF warns
The International Monetary Fund has lifted its forecasts for global growth, saying momentum is building in global economic activity and Donald Trump’s tax cuts in the US are likely to stimulate activity further.
It says the growth momentum is expected to carry into 2018 and 2019, and it has revised upwards its global growth forecasts by 0.2 percentage points for both years, from 3.7% to 3.9%.
Launching its latest World Economic Outlook (WEO) report at the annual Davos gathering of the global elite in Switzerland this week, the IMF upgraded its growth forecast for the world economy by 0.2 percentage points to 3.9% for both 2018 and 2019.
1. Extreme weather events
Davos is a Swiss ski resort now more famous for hosting the annual four-day conference for the World Economic Forum. For participants it is a festival of networking. Getting an invitation is a sign you have made it – and the elaborate system of badges reveals your place in the Davos hierarchy.
I certainly wouldn’t have thought the UK economy would be as robust as it currently seems. That is because some parts of the country, led by the North West [of England], are actually doing way better than people seem to realise or appreciate.
As well as this crucial fact, the rest of the world is also doing way better than many people would have thought a year ago, so it makes it easier for the UK.
If that’s the worst that Brexit will deliver, then I wouldn’t worry about it. Now, my own view is if we go for a really hard Brexit or a no-deal Brexit, we’ll probably suffer more than that 3%.
But if it is only 3%, what’s going on with the rest of the world – helping us – and with productivity improving, that will easily dwarf a 3% hit over 13 years, easily.
I’m almost embarrassed to accept that it might sound like that. Because of course in principle I share the views of many that Brexit is a really weird thing for the UK to impose on itself from an economic perspective.
And maybe this [better global growth] means the country’s going to be able to cope with Brexit better than certainly somebody like me might have thought some time ago.
Bookmakers’ shares are showing losses on reports that the UK government is planning to cut the maximum stake on fixed odds betting terminals from £100 to £2. It said in October it would reduce the stake to between £50 and £2, to tackle the “crack cocaine of high street gambling.” A consultation period ends on Tuesday.
William Hill is down 13%, Ladbrokes Coral has lost 12% and Paddy Power Betfair has fallen 2.6%. Analyst Alistair Ross at Investec said:
A DCMS official apparently indicated that while no formal decision has been made, £2 is ‘highly likely’. However Matthew Hancock, the new Secretary of State, has only just been appointed (9 January), and we think it is unlikely that a final decision on FOBT staking limits has actually been made. We also note that the FOBT consultation only closes tomorrow, and suspect speculation on the final outcome is premature.
As expected it has been an uncertain start to the week for European markets.
The FTSE 100 has fallen 0.13%, while France’s Cac is down 0.1%, Italy’s FTSE MIB has lost 0.33% but Spain’s Ibex is up 0.3%.
More on the German coalition talks. Here’s ING economist Carsten Brzeski:
Given the very detailed informative talks in January, the official coalition talks should not take too long – if all parties stick to the desired results. However, the SPD delegate pushed the party leaders to renegotiate details of the informative talks regarding the healthcare system, the labour market and immigration, increasing pressure on the SPD to bring some new political achievements from the forthcoming talks. The willingness of the CDU to really re-open some of the most controversial issues seems to be very limited.
… However, once there is an official coalition agreement, all SPD party members, more than 440,000, will get the chance to vote for or against it. Compared with today’s party congress, this party members’ vote will be a much tougher nut to crack.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s a fairly quiet start to the week at the moment but it is the quiet before the storm.
The data calendar is pretty empty today. This leaves markets at the mercy of media coverage of events at the World Economic Forum in Davos. Significant policy announcements are unlikely, but Davos does give journalists an opportunity to pontificate while wearing silly hats.
Having seen the US government shutdown confirmed after last week’s US close there might be a case for suggesting that stocks may well be adversely affected. This seems unlikely in the long run given that the shutdown, at least in the short term, is likely to be fairly limited in nature, given that by and large economic data from across the globe continues to show a fairly robust level of economic activity.
Furthermore, dysfunctional US politics isn’t really anything new, in fact dysfunctional politics appears to be becoming the norm, not only in the US, but the world over, even if in Germany we do appear to be starting to make progress on the formation of a new government after the German SPD party membership granted permission for the party leaders to begin new coalition talks with Angela Merkel.
(LONDON) – Four out of every five dollars of wealth generated in 2017 ended up in the pockets of the richest one percent, while the poorest half of humanity got nothing, a report published by Oxfam found on Monday.
As global political and business leaders gather for this week’s World Economic Forum annual meeting in Davos, Switzerland, the charity’s report highlights a global system that rewards the super-rich and neglects the poor.
It found that 3.7 billion people who make up the poorest half of the world saw no increase in their wealth in 2017, while 82 percent of the wealth generated last year went to the richest one percent of the global population.
“(It) reveals how our economies are rewarding wealth rather than the hard work of millions of people,” Winnie Byanyima, Oxfam’s executive director, told Reuters Television.
“The few at the top get richer and richer and the millions at the bottom are trapped in poverty wages.”
Byanyima blamed “tax dodging” as a major cause of global inequality and urged leaders to clamp down on tax havens and plough money into education, healthcare and jobs for young people.
In particular, Byanyima criticised U.S. President Donald Trump, who is attending the World Economic Forum, for creating “a cabinet of billionaires” and implementing tax legislation that she said rewarded the super-rich, not ordinary Americans.
The annual report by Oxfam found that the number of billionaires rose at a rate of one every two days between March 2016 and March 2017, while in the United States the three richest people own the same wealth as the poorest half of the population.
Oxfam said that women workers were worst hit by global inequality as they consistently earn less than men and usually have lower paid and more insecure forms of work.
The World Economic Forum has previously estimated that it would take 217 years before women earn as much as men and have equal representation in the workplace.
According to the 2017 Forbes rich list, the five richest people on the planet are all men – from Microsoft’s Bill Gates, to veteran investor Warren Buffett, Amazon boss Jeff Bezos, Inditex founder Amancio Ortega and Facebook’s Mark Zuckerberg.
“The economic model is not working at all,” Oxfam report co-author, Iñigo Macías Aymar, told the Thomson Reuters Foundation. “The way this wealth is being distributed we are really worried, it’s being concentrated in fewer hands.”
Oxfam called for all workers to receive a minimum living wage, the elimination of the gender pay gap and tougher rules to crackdown on tax avoidance.
Oxfam calls for action on gap as wealthiest people gather at World Economic Forum in Davos
The development charity Oxfam has called for action to tackle the growing gap between rich and poor as it launched a new report showing that 42 people hold as much wealth as the 3.7 billion who make up the poorest half of the world’s population.
In a report published on Monday to coincide with the gathering of some of the world’s richest people at the World Economic Forum in Davos, Oxfam said billionaires had been created at a record rate of one every two days over the past 12 months, at a time when the bottom 50% of the world’s population had seen no increase in wealth. It added that 82% of the global wealth generated in 2017 went to the most wealthy 1%.
Staying inside EU customs union is vital, Carolyn Fairbairn will tell Theresa May
The leader of Britain’s biggest business lobby group is to call for a “jobs first” Brexit transition deal to be negotiated within 70 days.
In a speech on Monday, Carolyn Fairbairn, the CBI director general, will also call for Theresa May’s government to show greater urgency in Brexit talks to give clarity to companies that will otherwise need to trigger alternative plans, including moving jobs and investment offshore.
Since 2015, Oxfam calculates, the richest 1% have owned more wealth than the rest of the planet. The very wealthy think they no longer share a common fate with the poor. Whatever the warm words at Davos, no company bosses will put their hands up to the fact they play one country against another in order to avoid taxes; no firm will be honest about their attempts to stymie trade unions or about how they lobby against government regulation on labour, environment or privacy that tilts the balance of power away from them and towards the public. The largest western corporations and banks now roam the globe freely. As memories of the financial crisis recede, they are going back to the myth that they are no longer dependent on national publics or governments. Lobbyists for the corporate world claim that markets are on autopilot, that government is a nuisance best avoided.
Readers respond to Andy Beckett’s recent Guardian article
Andy Beckett’s long read was elucidating and possibly prescient (Post-work: is the job finished?, 19 January). However, it’s not just a matter of whether workers can survive having the time and freedom of post-work but also how to manage the transition from one to the other. As a retiree of almost 70, most of my friends and I fill our days with meaningful activity alongside pleasurable family and leisure time. Nonetheless, some of them found it hard to make the switch.
Fortunately the health service allowed me to cut down my job to half-time working at first, and this helped the process of letting go. Then, when leaving the NHS, I was fortunate to still have a private practice for a further six years, for which some of my friends envied me. They told me of the near trauma of stopping work being like falling off a cliff before they found new roles with which to challenge themselves and utilise their talents.