Sir David says we have to "think about things that are difficult and things that are painful" otherwise there will be "more pain" around the corner pic.twitter.com/MBP8YJ8YFW
— Kalyeena Makortoff (@kalyeena) January 21, 2019
Q: Can you get your message across at Davos?
People at the World Economic Forum have come from across the globe, and some have enormous power, Sir David replies.
Some people here have more power than a national state.
We need to persuade those people, and get together to solve these problems.
The enormity of the problem has only just dawned on quite a lot of people.
Attenborough then repeats his warning from his speech earlier - that time is short.
Unless we sort ourselves out in the next decade or so we are dooming our children and our grandchildren to an appalling future.
Unless people wake up that this is a crisis, we’re lost, he adds.
On ocean pollution, Sir David Attenborough says that the amount of plastic dumped into the oceans is “terrifying”.
He describes a scene where a seabird chick begs for food from its parent, only to be given a torrent of plastic waste.
What we’re doing to the oceans is “dreadful”, he adds.
Attenborough: Growth is coming to an end
Our economics editor Larry Elliott asks Sir David how we tackle climate change while also pursuing constant economic growth.
Attenborough says it’s a problem -- but one that we must wake up to.
Growth is going to come to an end, either suddenly or in a controlled way.
Anyone who thinks you can have infinite growth in finite circumstances is “either a madman or an economist.” Attenborough adds.
Updated
Sir David Attenborough has now swapped the rarified atmosphere of the Crystal Awards ceremony for the less gentrified experience of meeting with journalists at Davos.
I guess he’s seen plenty of wildlife in his time, so won’t scare easily.
We’re watching scenes from Our Planet - the new environmental series which Attenborough has created in partnership with Netflix.
It looks jaw-dropping -- footage of a glacier crashing into the ocean in Greenland, as climate change takes its toll, accompanied by Attenborough’s dulcet, authoritative tones. I suspect it’s going to be a hit.
Updated
Here’s the climax of Sir David’s message to the so-called global elite at Davos tonight:
“If people can truly understand what is at stake, I believe they will give permission for business and governments to get on with the practical solutions. And as a species, we are expert problem solvers. but we’ve not yet applied ourself to this problem with the focus that it requires
We can create a world with clean air and water, unlimited energy, and fish stocks that will sustain us well into the future. But to do that, we need a plan.
Over the next 2 years there will be United Nations decisions on climate change, sustainable development, and a new deal for nature.
Together these will form our species’ plan for a route through the antropocene [the age of humans].
What we do now, and in the next few years, will profoundly affect the next few thousand years.
All the Crystal Award winners spoke powerfully about their causes. Here’s some instant reaction:
A delightful address by Sir David Attenborough as he accepts #WEF19 crystal award.
— Pranjal Sharma (@pranjalsharma) January 21, 2019
"Let us move away from blame & guilt to get on with practical solutions"#climatechange #ClimateAction pic.twitter.com/4lfThEGic0
Couldn’t think of a better recipient of A #CrystalAward #WEF19 than Sir David Attenborough reminding us all that the decisions we make now will effect life on earth for thousands of years #NewDealForNature pic.twitter.com/n5vhrISKau
— Lisa Walker (@Lisa13Walker) January 21, 2019
Attenborough doesn’t have any time of excuses, either, telling Davos that people need to move on from simply blaming each other, or feeling remorse for the state of the world.
Practical action must be the focus.
Without action on climate, civilization will collapse, David Attenborough tells the World Economic Forum.
He’s calling for a new deal for nature, and for humans to use their natural problem-solving skills to tackle the mess we’ve created.
Sir David Attenborough awarded at #WEF19 opening: “The Garden of Eden is no more....but humans are natural problem solvers...” pic.twitter.com/yURU1soDtO
— Ana Trbovich (@AnaTrbovich) January 21, 2019
Sir David Attenborough now speaks about the changes in communication in his career - his first TV series, decades ago, was only seen by a few million viewers.
Today’s technology gives a massively larger reach -- which can help mobilise people to address humans’ impact on the environment before it’s too late.
He’s challenging the politicians, business leaders and others at WEF to raise their game, adding that what we do in the next few years will shape the next few thousand years.
Updated
Attenborough: The Garden of Eden is over
Up comes Sir David to another warm round of applause.
He thanks WEF for the beautiful award, and for the invite to Davos.
He then turns to the burning issue of climate change, saying
I am quite literally from another age, says Sir David.
I was born during the holocene, the period of climatic stability that allowed humans to settle, farm, trade, and made us the globally connected species we are today.
Humanity’s impact on the world in Attenborough’s lifetime, though, means that “The Garden of Eden is no more.”
We have changed the world so much that scientists claim we are in a new geological age, the anthropocene, the age of humans.
Updated
Now it’s Sir David Attenborough’s turn.
Hilda Schwab, who is presenting today’s awards, tells delegates that he was recently voted as the most trustworthy person in Britain (cue a fond round of applause)
He is truly one of the world’s most beloved figures, Schwab adds.
Saudi Arabia’s first female filmmaker, Haifaa Al-Mansour, now collects her award.
She explains she’s overwhelmed to be at Davos, having come from a small town in Saudi Arabia. As a child, her father showed her films (even though they were banned), which opened her eyes to a wider world.
Al-Mansour says:
It is important to expose children to art and film and culture, especially in conservative places.
This will help create global citizens in places such as the Middle East, she explains, adding:
Building culture makes a difference in the whole world.
Composer Marin Alsop collects her award first.
She thanks the World Economic Forum, and explains the value of music to young people.
I firmly believe that art can transform lives, and everyone deserves a chance to experience it.
She adds that learning an instrument at an early age helped her to develop valuable skills such as self-esteem.
Unlike in maths, When you play a phrase on the violin, you’re always right.
Alsop now explains that she’s proud to be the first woman to lead a major US orchestra, and the first to lead a major UK orchestra (the Bournemouth Symphony).
She cites the support of her parents, for helping her to overcome hurdles as a female musician. Her advice - never give up. If the front door is locked, go round the side and get in through a window....
Alsop is now using her skills to bring music to underprivileged children in Baltimore. The children involved in this Orchids project are developing impressive skills -- one is about to be the first member of her family to go to college.
Updated
After a very long, very successful career, Sir David Attenborough needs little introduction.
But here’s his citation from the World Economic Forum, for “his leadership in environmental stewardship”.
Sir David Attenborough’s broadcasting career spans more than six decades during which he has played an extraordinary role both reinventing and developing the medium of television and connecting people to the wonders of the natural world, bringing distant peoples, animals and habitats into living rooms across the planet. As a BBC producer and executive, he has played a crucial role in creating new forms of programming and scheduling that, to this day, influence global broadcasting.
His work includes many iconic productions, from the ground-breaking “Zoo Quest” series to landmarks including “Life on Earth”, “The Living Planet”, “The Trials of Life”, “The Private Life of Plants”, “Life of Mammals” and “Planet Earth”. At the Annual Meeting, Sir David will present key sequences from “Our Planet”, a new series by WWF, Netflix and Silverback Films, focusing on the preservation of life on Earth.
Haifaa Al-Mansour is being honoured by WEF for her leadership in cultural transformation in the Arab world.
WEF says:
Haifaa Al-Mansour is the first female filmmaker in Saudi Arabia. “Wadjda”, Al Mansour’s feature debut, was the first feature film shot entirely in Saudi Arabia and the first by a female director. The success of her 2005 documentary “Women Without Shadows” was a breakthrough that was followed by a new wave of Saudi filmmakers and front-page headlines of Saudi Arabia finally opening cinemas in the kingdom. She was recently appointed to the Board of the General Authority for Culture to advise on the development of the cultural and arts sectors in Saudi Arabia. She recently released “Mary Shelly” starring Elle Fanning, and “Nappily Ever After” starring Sanaa Lathan. Al Mansour is the first artist from the Arabian Gulf region to be invited to join the Academy of Motion Picture Arts and Sciences.
Marin Alsop is being recognised today for her leadership in championing diversity in music.
WEF says:
Marin Alsop, Music Director of the Baltimore Symphony since 2007, is one of the greatest conductors of our time. Earlier this year she was the first woman to be appointed Chief Conductor of the Vienna Radio Symphony Orchestra and, in 2013, was the first woman in 118 years to conduct the BBC’s “Last Night of the Proms”. She has tirelessly endeavored to provide opportunities for all people to access music for a world where diversity in classical music is the norm rather than the exception. In Baltimore she launched the “OrchKids” programme to serve the city’s less privileged children, and the BSO Academy and Rusty Musicians for adult amateur musicians. She is also Music Director of the São Paulo Symphony Orchestra. A graduate of Yale University and a MacArthur Fellow (2005), at the Annual Meeting, she will lead the Opening Performance with the Taki Concordia Orchestra.
Attenborough, Alsop and Al-Mansour to be honoured at Davos
Cowbell are ringing inside the Davos Congress Centre (it’s a Swiss thing), to warn delegates that it’s nearly time for the opening ceremony of this year’s Annual Meeting.
As usual, WEF are handing out three Crystal Awards, to individuals who have helped make the world a better place.
This year, the awards are going to composer Marin Alsop, filmmaker Haifaa Al-Mansour, and broadcaster and naturalist Sir David Attenborough.
They’ll appear on stage in a few minutes, after WEF founder Klaus Schwab has spoken
There’s a lot of chatter about the state of the global economy on Davos’s icy pavements (and snug rooms inside the security cordon).
The IMF’s growth downgrades will add to concerns... could we be facing a recession?
Data firm IHS Global Insight thinks not. Its chief economist, Dr. Nariman Behravesh, predicts another year of growth, but below last year (as the IMF also expect).
He adds:
I anticipate World Economic Forum attendees will be anxious about financial turmoil and the potential damage from fallout over U.S. policies such as the simmering trade conflict between the U.S. and China and the U.S. government shutdown.
However, U.S. companies will be more upbeat, compared with European and Chinese companies – especially those in the manufacturing sectors – as U.S. business conditions remain the strongest among the G7 nations. The mood of Chinese delegates is likely to be quite somber.
Axel Weber is now hitting out at firms who misuse or are misnaming sustainable investment opportunities.
The UBS chief tells his audience in Davos that greenwashing is often deployed for the headlines means “the whole industry gets discredited” and creates pushback.
It’s “almost like misselling”, he added.
UBS: More funding needed for sustainable development
UBS is kicking off its Davos agenda with a white paper warning that a lack of private funding is putting the UN Sustainable Development Goals “at significant risk”.
It says the financial sector should be offering more personalised investment options and use “simpler and more consistent sustainability data and terms”.
Axel Weber (centre left, below) is hosting the relatively intimate (read: small) gathering in the bank’s retail outlet on the Pomenade in Davos, that’s well stocked with drinks and hotdogs for guests.
Davos kicks off with pro-immigration report
Over in Davos, the peace and tranquility of this small ski resort is being rudely interrupted as thousands of business leaders, politicians, economists, technologists and campaigners descend.
While brightly clad childen hone their technique on the practice slopes, the roads below are chockablock with luxury limos and shuttle buses ferrying global elite around (your humble correspondent walked - it’s cold, but lovely)
Locals look unimpressed, but resigned to a week of disruption as the World Economic Forum gets underway.
WEF gets a lot of stick, from critics who scoff that its attendees are mainly responsible for the world’s problems. But the Forum insists it wants to make the world better - reduce inequality, tackle climate change, and use back against populism.
And on that score, a new report has found that people around the globe are firmly in favour of co-operation between nations, and broadly supportive of migration. Europe, though, is less keen.
The poll of more than 10,000 people found that:
- 80% of respondents worldwide believe that all countries can benefit at the same time, rejecting the notion that national improvement is a zero-sum game
- Europe is the only continent where people view immigrants as “mostly bad.”
- A majority of all respondents trust climate science, but 17% in North America express little to no trust
- Respondents in Eastern Europe/Central Asia and Western Europe see upward mobility as elusive in their country
- Majorities in all regions and super majorities in most regions think cooperation between countries is very or extremely important.
Away from Davos:
Now the festive fun has worn off and if the general economic doom and gloom were not enough to get you down, today is apparently Blue Monday – deemed the most depressing day of the year when we are most fed up and likely to apply for a new job or book a holiday – or even both, writes our consumer affairs correspondent Rebecca Smithers.
To get people in the holiday mood, Heathrow Airport has launched Sound Escapes – an ‘immersive’ soundtrack created from over 24 hours of recordings inspired by passengers in collaboration with award-winning sound artist Nick Ryan. It features waves on a beach, the splash of a swimming pool and a plane taking off, which have all topped the list of sounds that help transport Brits to holidays, inspiring nearly half of travellers to book a getaway.
Meanwhile a new study from hiring app Job Today says that while January is far from joy-free, Blue Monday marks the month when most of us take charge and make a change. The number of people searching for ‘career change’ skyrocketed in January by more than 40% of the monthly average, and nearly double that of December, as consumers seek to jump ship with their jobs to make good on the ‘new year, new me’ mantra.The app also recorded a 21% increase in job applications in January, compared to December.
Of course it’s also Dry January. And if you fancy drowning your sorrows after Christmas spending has caught up with you, Beck’s Blue, the alcohol-free (sorry) beer brand is taking over Blue Monday. Brewing giant AB InBev– in partnership with pub group Mitchell and Butlers, is offering thirsty consumers a free bottle of Beck’s Blue. Those interested have to apply for a voucher first. Magnanimously, the company hopes this will drum up a bit of extra custom for pubs at a quiet time of year…
Updated
Mid-afternoon summary
The International Monetary Fund has warned that the US-China trade war and weakness in Europe could trigger a sharp global slowdown, as it cut its growth forecasts for the world economy for the next two years – its second downgrade in three months. It also cited a sharper slowdown in China and a potential no-deal Brexit as major risks to its outlook.
Speaking in Davos in Switzerland, where the global elite are gathering for the World Economic Forum’s annual meeting, the IMF’s managing director, Christine Lagarde, said: “Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.”
China’s latest official data showed the world’s second-biggest economy slowing to the weakest rate in 28 years in 2018, of 6.6%.
On stock markets, the FTSE 100 index in London has just dipped into the red, trading down 3 points, at 6965.23. European markets are also in negative territory.
- Germany’s Dax down 0.4%
- France’s CAC down 0.2%
- Italy’s FTSE MiB down 0.58%
- Spain’s Ibex down 0.17%
Sterling has edged off its earlier lows but remains volatile ahead of Theresa May’s statement on her “Plan B” for Brexit. It is more or less flat against the dollar at $1.2873 and against the euro at 88.27 pence.
In Davos, Tina Brown, the former editor of Vanity Fair and the New Yorker, and Credit Suisse will host their eighth annual Women of Impact dinner tomorrow.
Every year, when more than 2,500 political and business leaders, policymakers, economists, celebrities and journalists pour into the Swiss resort, women are heavily outnumbered by men.
The guests of honour at the dinner this year will be Michelle Bachelet, the first woman to serve as Chile’s president who was recently appointed as the United Nations High Commissioner for Human Rights, and Lina Khalifeh, the founder of SheFighter, a self-defence studio that has already trained more than 15,000 women from all over the world.
The dinner, which has previously honoured Amal Clooney, Ruth Davidson, Nadia Murad and Dr Rola Hallam among others, brings together 80 influential world leaders from business, government and media.
Updated
The IMF’s chief economist, Gita Gopinath, said the immediate and dominant risk to the British economy is Brexit, rather than China’s slowdown – and the uncertainty around what happens at the end of March has already had an impact.
We’ve already seen the negative effect of this uncertainty on British investment.
She said the IMF estimates the cost of a no deal Brexit, which would imply a reversal to WTO (World Trade Organisation) terms, to the British economy, would be a decline in long-run GDP of 5-8 percentage points.
You can watch the IMF press conference here.
IMF's Christine Lagarde holds news conference ahead of #WEF https://t.co/m2rEpkS9wc
— Reuters Top News (@Reuters) January 21, 2019
Updated
Here are Lagarde’s comments in full.
After two years of solid expansion the world economy is growing more slowly than expected and risks are rising.
It is facing significantly higher risks, some of them actually related to policy.
She noted that higher tariffs and increased uncertainty over future trade policy had fed into lower asset prices and higher market volatility, which contributed to tightening finance conditions, including for advanced economies – a major risk in a world of high debt burden.
Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.
Here is our full story on the IMF’s latest economic outlook, released in Davos, where the global elite are gathering for the World Economic Forum’s annual meeting.
Global growth projected to decline to 3.5 percent in 2019 before picking up slightly to 3.6 percent in 2020. #WEO https://t.co/1lzr85icmB pic.twitter.com/te4ORSJlnB
— IMF (@IMFNews) January 21, 2019
Here is some instant reaction to the IMF’s growth forecast cuts.
Ouch! #IMF cuts German 2019 GDP outlook by a whopping 0.6ppts to 1.3%. Largest revision among the industrialized countries, citing soft domestic demand, ailing auto industry & external demand. Saudi Arabia GDP alone was reduced by the same amount https://t.co/iLZc1UmTeZ via @welt pic.twitter.com/VB12aeVGas
— Holger Zschaepitz (@Schuldensuehner) January 21, 2019
Asked about China, she said the slowdown – to an annual growth rate of 6.6% in 2018, the lowest since 1990 – was exactly what the IMF had expected.
Nothing dramatic is happening at this point.
Updated
The IMF’s chief economist, Gita Gopinath, is taking questions on the latest forecasts. Referring to the “Brexit cliffhanger,” she said:
A no deal Brexit is one of the major risks to our forecast.
She said the forecasts assume there is a smooth transition to the new set-up, but
if there is a disruptive exit or there is continued uncertainty for many more months, both of those are going to weigh negatively on economic growth going forward.
She added that it was “imperative” for political leaders to resolve this uncertainty immediately.
Updated
IMF chief Lagarde: Risk of sharper decline in global growth has increased
IMF head Christine Lagarde just spoke, at the start of the WEF meeting in Davos.
She said while a global recession was not yet around the corner, the risk of a sharper decline in global economic growth had certainly increased. She added that policymakers must prepare for a serious slowdown, and called on them to reduce high levels of government debt to boost economic resilience.
She concluded by saying:
The international community must come together to build a brighter future for all.
Updated
IMF cuts global growth forecasts
NEWSFLASH: The International Monetary Fund has cut its growth forecasts for the global economy for the next two years, and urged the US and China to resolve their trade war.
Our man in Switzerland, Graeme Wearden, writes:
In its latest World Economic Outlook, just released in Davos, the IMF warns that growth will slow to 3.5% in 2019, down from 3.7% in 2018, picking up to 3.6% in 2020. Back in October, the Fund forecast 3.7% growth in both 2019 and 2020; before worrying signs of weakness appeared, particularly in the euro area.
Warning that “The global expansion has weakened”, the IMF cited softer momentum in several economies, “including in Germany following the introduction of new automobile fuel emission standards and in Italy where concerns about sovereign and financial risks have weighed on domestic demand.”
The IMF has slashed its forecast for German growth this year to just 1.3%, from 1.9% expected three months ago. Italy’s projected growth rate in 2019 has also been lowered, from 1% to just 0.6%.
The UK is expected to expand by 1.5% this year, up from 1.4% in 2018, and by 1.6% in 2020 (revised up from 1.5% in the last forecasts). But the Fund adds that there is still much uncertainty over the UK’s prospects, given the risk of a no-deal Brexit.
Warning that global risks are tilted downwards, the Fund adds: “An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook. Financial conditions have already tightened since the fall. A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt. These potential triggers include a “no-deal” withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China.”
China is expected to grow by 6.2% in 2019 and 2020, down from 6.6% last year. Given these risks, the Fund is calling - again - for an end to protectionist trade policies that hurt the global economy.
It says: “The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilising an already slowing global economy. “
Updated
Brexit bites: over 200 products subject to shrinkflation
It’s official: a number of firms have reduced pack sizes of consumer goods after the weak pound pushed up cost of imports following the 2016 Brexit vote.
It’s not just Mars shrinking its Maltesers, M&Ms and Minstrels chocolate packs by up to 15%, and McVitie’s cutting the number of Jaffa Cakes in a packet from 12 to 10.
According to the Office for National Statistics, 206 individual items, from toilet roll to chocolate, were made smaller between September 2015 and June 2017, more than double the number that increased in size.
This may be better for your waistline, but not for your wallet. “Shrinkflation” refers to the practice of making goods smaller, while selling them at the same price.
You can read the full story here.
Back to China. Monday’s economic data suggested the downturn may not be as severe as thought. The country’s industrial output rose 5.7%, while retail sales increased 8.2% in December, compared to a year earlier.
This suggests the hard landing scenario for the Chinese economy is diminishing, says Neil MacKinnon, global macro strategist at Russian bank VTB Capital.
Numbers for industrial production and retail sales are now consistent with the stabilisation of economic activity. Upcoming PMI data for January can provide confirmation whether the prospect of a hard landing scenario for the Chinese economy is diminishing.
The latest GDP data shows that annual growth in 2018 was 6.6%, the slowest since 1990, though many China-watchers question the veracity of the official data and believe that true growth is a lot lower, perhaps something like 2-3%, which would equate with at least stall-speed in terms of activity.
The Chinese authorities have already loosened monetary and fiscal policy, though high levels of corporate debt and excess leverage can mitigate the impact on economic growth.
Over in Japan, the former Nissan chairman Carlos Ghosn has offered to wear an electronic ankle tag and hire security guards to track his every move, in another bail request.
Ghosn is awaiting trial on financial misconduct charges and has been in jail since he was arrested on 19 November. The Tokyo district court has already turned down one bail request, believing Ghosn to be a flight risk and that he could tamper with evidence over allegations that he underreported his income by tens of millions of dollars and transferred personal investment losses to Nissan.
The case has rocked Japan’s car industry and cast doubt over the future of the carmaker’s alliance with Renault.
You can read more here:
Sterling slips ahead of May's "Plan B"
The pound has slipped before Theresa May lays out her “Plan B,” designed to break the deadlock in parliament over Brexit.
Sterling is down 0.2% against the dollar at $1.2847, and has lost 0.3% versus the euro, trading at 88.53 pence.
The pound has stabilised above $1.28 since last week on expectations that Britain would not crash out of the EU without a deal.
Ricardo Evangelista, a senior analyst at online broker ActivTrades in London, says:
It is generally understood that the revised plan for a negotiated Brexit involves asking the EU for changes, in the ‘back stop’ arrangement; but being one of the Union’s ‘red lines’, it is unlikely that any proposed changes to the controversial arrangement will be accepted.
Therefore, the chances of any substantial developments in the process this Monday are slim and because of the that, sterling is likely to remain where it has been for the last week, just above $1.28, with traders pricing in comparatively low chances of a no deal Brexit, but also reflecting a large degree of uncertainty regarding the outcome of the negotiations.
Updated
William Hill has warned (again) that full year profits will be down 15% from 2017, totalling £234m. The bookmaker already cut its profit forecast in November.
The company said it would “remodel [its] retail offer while building a digitally-led international business”. It is looking at new products to offer alternatives to fixed-odds betting terminals, following the UK government’s decision to slash maximum stakes on FOBTs from £100 to £2. William Hill is also closing 900 betting shops in the UK, as announced last summer.
Faced with the clampdown in Britain, the firm is pushing aggressively into the lucrative US sports betting market, after several states legalised betting on football, baseball, basketball and other sports.
Updated
The chief executive of Just Eat, Peter Plumb, has left abruptly. The takeaway ordering website announced he had stepped down with immediate effect – just 16 months after joining the firm from MoneySavingExpert.com.
Chief customer officer Peter Duffy will run the business until a permanent replacement is found. The shares dropped 3% on the news but are now slightly up.
Plumb said:
2018 was another year of strong growth for the group. The business is in good health, and now is the right time for me to step aside and make way for a new leader for the next exciting wave of growth.
The firm also upgraded its forecasts. It now anticipates 2018 orders of 221m, revenue of around £780m and underlying earnings before interest, tax, depreciation and amortisation of £172m-£174m.
However, Plumb’s strategy demanded more investment and led to a slowdown in earnings growth. He upgraded Just Eat’s technology and launched its own delivery service in the face of increasing competition from Deliveroo and Uber Eats.
Updated
The troubled cafe chain Patisserie Valerie issued a statement this morning, saying that talks with its banks continue and it will give an update when they are concluded. The chain is fighting for its survival.
Luke Johnson, Patisserie Valerie’s leading shareholder, has been seeking to extend a standstill agreement on its bank facilities, which officially expired at midnight on Friday.
Without an agreement, the company’s lenders, HSBC and Barclays, could demand repayment of debts that may amount to nearly £10m, which could force Patisserie Valerie to call in administrators.
You can read more here:
Updated
Here’s a round-up of this morning’s corporate news.
GlaxoSmithKline’s chairman Sir Philip Hampton is to step down ahead of the company’s split, which will see it spin off its consumer healthcare business in a £10bn joint venture with its US rival Pfizer. The board has started looking for a successor. Hampton has been chairman of Britain’s biggest pharmaceutical company since 2015. Before that, he chaired Royal Bank of Scotland.
Hampton said:
It is a privilege to serve as chairman of GSK. It is one of the UK’s great companies and under Emma Walmsley’s leadership, GSK has made very good progress with a new strategy and new approach to R&D. Following the announcement of our deal with Pfizer and the intended separation of the new consumer business, I believe this is the right moment to step down and allow a new chair to oversee this process through to its conclusion over the next few years and to lead the board into this next phase for GSK.
European stock markets slipped in early trade after hitting six-week highs last week, slightly unnerved by the Chinese slowdown. In London, the FTSE 100 index opened 0.1% lower but is now 0.13% ahead, a gain of 9 points, to 6977.80.
- Germany’s Dax down 0.44%
- France’s CAC down 0.3%
- Spain’s Ibex down 0.25%
Updated
Some say China’s problems are much deeper than the trade war, noting that productivity growth has been weak since the financial crisis.
This, along with flagging population growth, is a toxic economic combo. Meanwhile, the growing antagonism of China’s trading partners is closing off access to cutting-edge technology.
Since the crisis, Beijing has deployed bursts of credit-based stimulus to keep the economy moving. But this might feed the longer-term problem, [Bloomberg columnist] Noah Smith suggests, by pumping capital into local governments and pricey building projects that don’t boost productivity. Far more than Trump, China may be stunting its own economic future.
Hussein Sayed, chief market strategist at forex broker FXTM, says hopes of a US-China trade deal are propping up stock markets.
Despite the complex situation, it seems markets are tending to believe that negotiations are moving in the right direction and this is likely to provide further support to risk sentiment.
The release of Chinese GDP figures, which showed the economy has grown at its slowest pace in almost three decades, was not a surprise and this has been factored into asset prices.
US trade tariffs have yet to deal direct significant impact to the country’s growth, however, the ongoing trade dispute is leading to a further slowing in consumer consumption and business capital expenditures.
While China may continue to use its monetary and fiscal tools to offset the damage done by the trade conflict, there’s a limit on how much China may loosen policy given the swelling of its debt. It seems the only way for China to prevent a hard landing is to reach to a deal with the U.S., and that’s what the markets are hoping for.
Updated
Trump: "A deal could very well happen with China"
Although Donald Trump denied reports that US tariffs on Chinese exports would be lifted, he said on Saturday that there has been progress towards a deal with China.
“Things are going very well with China and with trade,” he told reporters at the White House.
He added:
If we make a deal certainly we would not have sanctions and if we don’t make a deal we will.
We’ve really had a very extraordinary number of meetings and a deal could very well happen with China. It’s going well. I would say about as well as it could possibly go.
Chinese vice premier Liu He will head to the United States on 30 and 31 January for the next round of trade negotiations with Washington.
From @Breakingviews - China's economy is cooling faster than Beijing wants, but not fast enough to warrant the aggressive monetary and fiscal steps some bureaucrats, and many investors, would like. For now, expect more talk than action: @cbeddor https://t.co/jO6LQ5j8y1 pic.twitter.com/kR52xe2ff5
— Reuters Top News (@Reuters) January 21, 2019
China's econ data is trash. But that misses the point: growth is decelerating, and after years of rapid expansion the rest of the world is not remotely insulated from a slowdown https://t.co/s7tDuDnYyc pic.twitter.com/KosrDkect5
— Mike Bird (@Birdyword) January 21, 2019
Here is some reaction to the Chinese GDP data.
ING economist Iris Pang says:
The details show that the infrastructure investment is shaping up to be the engine for 2019. However, non-infrastructure business activities will be dismal this year. And debt will grow.
Industrial production grew faster at 5.7% year-on-year in December from 5.4%YoY. However, again, when we look at the details, we find that capital expenditure related items are shrinking, not growing. For example, industrial robot production shrank 12.7%YoY.
Retail sales tell a story of a cautious consumer, one that is not keen to spend on luxury items. For example, automobile sales fell 8.5%YoY in December.
Turning to the trade war, she says 2019 will be a year of uncertainty, especially for electronics.
Even though there are some signs of hope stemming from the negotiations on US-China trade, we believe that both sides will only agree on certain standard trade issues. However, the more important topics in the trade talk, intellectual property and the transfer of technology, are much more difficult to reach agreement on. And Liu He will not be able to decide on these topics alone. That’s why we believe that by 1st March 2019, the trade talks may only have agreements on trade but not technology.
In this case, there will be increasingly more developed economies, or even emerging economies, trying to ban the use of China-made electronic components and goods. That will hurt the production sector of electronics in China, and the prices of these items will fall in China.
Producers of these electronic parts and goods will face an increased chance of close down, and debt default. To avoid this, the Chinese government has to allow these companies to issue bonds in the capital market or tap banks to repay their outstanding loans to survive. Debt levels will therefore increase.
Introduction: Chinese slowdown sparks fears for global economy
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
China’s economic growth slowed to its slowest pace in 28 years in 2018 after years of rapid expansion, amid a damaging trade war with the US and weaker consumer spending. Official data out on Monday showed the world’s second-biggest economy grew 6.6%, down from 6.8% in 2017 and the lowest rate since 1990.
In the fourth quarter, Chinese GDP rose 6.4%, the slowest rate of growth since early 2009, the height of the financial crisis. The slowdown puts further pressure on Beijing to reach a deal with Washington to end the trade war that started last July after talks broke down.
The figures also raise fears that China may no longer be able to help shore up weakening global growth, as it has until now.
Asian markets held on to their gains, however, on hopes of stimulus measures from Beijing to counteract slowing growth. Policymakers have pledged more support this year but have ruled out a massive stimulus because in the past this resulted in a mountain of debt. Japan’s Nikkei and Hong Kong’s Hang Seng index both gained 0.3% while the two main Chinese indices were up more than 0.5%
You can read more on China here:
Investors and traders are also waiting for Theresa May’s “Plan B” for Brexit, which she is due to present to parliament later today. The UK prime minister is expected to reject calls to forge a cross-party consensus on Brexit.
US markets are closed today for Martin Luther King Day.
Also coming up today....
The global elite are heading to Davos for the World Economic Forum’s annual meeting - a mix of speeches, discussions, top-level meetings, fireside chats and swanky parties. They’ll be discussing the fourth industrial revolution, how to help those left behind by globalisation, the rise of populism, mental health, and the threat of climate change and extreme weather, among other topics.
The meeting will begin tonight, when WEF hands its traditional crystal awards to top conductor Marin Alsop, pioneering Saudi Arabian film-maker Haifaa al-Mansour, and broadcaster and naturalist Sir David Attenborough.
Before that, the International Monetary Fund will release a new assessment of the global economy, with a press conference at Davos.
The agenda:
1pm GMT: IMF publishes its latest World Economic Outlook
5pm GMT: WEF opening ceremony and crystal awards
Updated
