Coverage of Thursday’s highlights at the World Economic Forum will include contributions from Angela Merkel, David Cameron and Henry Kissinger, brought to you by the FT’s team of reporters and columnists in Davos and by Ben Fenton, Claire Jones and Lina Saigol in London.
18.00: The Davos live blog is closing down for Thursday. For more reading and insight on today’s events, please visit the FT’s in-depth page on the World Economic Forum. We will be back with Friday’s highlights, including world wide wisdom from Sir Tim Berners-Lee and central forethought from Mario Draghi.
17.30: Gillian Tett reports on her own Davos session this morning and its compelling insights into China’s future:
One of the big guessing games in Davos this year is whether China will be able to maintain a growth rate of 8 per cent a year. But today I had a chance to interview Li Daokui, the renowned Chinese economist and former central bank official – and he insisted during the Davos event that the 8 per cent growth debate is entirely the wrong thing to worry about.
In the short to medium term, Li argued, there is every reason to expect China to keep expanding at a healthy pace since the economy is still “catching up” with other countries and it is rebalancing away from export-lead growth towards domestic consumption at a much faster pace than most Western observers recognise. And while many Western economists argue that the official statistics overstate the pace of growth, Li thinks that the data is pretty accurate: even if some state activity is inflated, that is being balanced by the fact that swathes of the “informal” Chinese economy are being under-recorded.
However, Li argued that the really big issue now is what model China will want to emulate in the future: will it be more “capitalist” like America, or more state-controlled like Singapore (or, a cynic might suggest, something more wild, like Russia). Unsurprisingly, perhaps, Li thinks that Singapore is the best option. But he stressed that it remains unclear whether the new leadership will be ready to embrace the radical reforms that he thinks will be needed in China over the next decade; it is also unclear whether public opinion in China will permit this. And while the citizens are not expressing their views via the ballot box, Li says it is a mistake to think that popular views do not count. Whereas America relies on democracy to test public views, China is now using Twitter, he argues: the social media forum has become such a crucial weather vane of public sentiment that it is being closely watched by top Chinese officials, and influencing policy. And it is not just politicians who are Twitter-focused: Li himself currently has some 5m Twitter followers, who are eagerly reading his economic tweets.
It is a fan club that even Beyoncé would be excited about; let alone any of the Western economists who are in Davos this week.
17.09: Chris Giles, economics editor, has been talking food at Davos:
The world has easily enough potential farming land to supply the global population with food, according to Gregory Page, the chief executive of Cargill, the normally secretive enormous trader of commodities. In one of those brief but insightful encounters that the World Economic Forum allows, Mr Page told me why some of the regular fears of ever-rising food prices were overblown. While orthodox economics is being thrown out of the window in the macro sphere, price is central to incentives and everything is pretty normal in food production, according to Mr Page.
When the price of a food commodity rises, it provides incentives for greater planting the next season, or producing two crops in a season and supply is amazingly responsive, he says. Bad harvests in one location are normally offset by good ones elsewhere. “Absent a black swan event, there is both compensatory weather and compensatory economic incentives”.
But why then have food prices been so volatile? Partly because there are delays in the supply response and partly, because demand shows perverse features. Rather than falling when prices rise, he complains that some developing world governments get so panicked (for legitimate reasons of wanting to feed their populations) that they stockpile food when prices are rising, so exacerbating the upswing in price. So while the long-term trend increase in tonnes of food produced in the world has been rising at between 1 to 2 per cent a year, prices are now much more volatile than they used to be.
The really interesting nugget he suggested for moderating this volatility is to bring food and energy production together, with crops used for biofuels when prices are low and such use banned when prices rose rapidly. There were conversations between agriculture ministers and finance ministers to see if any arrangements could be put in place last year as prices rose rapidly, Mr Page said, but these petered out once food prices fell sharply. So it is still on the to-do list.
Any good news for 2013? Yes, he says. Regarding weather patterns he says, “if things go OK this year, not even brilliantly, the world’s farmers are able to cover the world in green”.
17.03: Here is the FT.com story on Angela Merkel’s Davos address.
16.49: A short, but acute observation from Gideon Rachman on why the world outside doesn’t quite trust the world inside Davos:
Davos is sometimes portrayed as an evil conspiracy. But – surveying my appointments today – I think its real problem may be that countries send their good guys here, while the baddies stay at home.
So today I was at a meeting with Dmitry Medvedev, the Russian pm, who
sounded eminently reasonable. But Putin is at home in Moscow. Then it was the ever charming Mario Monti, but Berlusconi is back in Italy. And then the Egyptian prime minister, Hesham Qandil, who speaks fluent English and is a technocrat with a doctorate. President Mohamed Morsi, a much tougher proposition, has stayed in Cairo.
In Davos, everybody is reasonable and all problems are soluble. The outside world, however, is a different proposition.
16.46: Boris Johnson waxes lyrical at the “constellation of egos” at Davos.
16.41: The FT’s banking supremos Patrick Jenkins, banking editor, and Tom Braithwaite, US banking editor, have filed a piece on what Davos 2013 means for the bankers who throng the halls but still hope to keep a low public profile.
16.27: Competitive? Moi?
16.20: Activists at Davos have awarded their annual Public Eye shame awards to Goldman Sachs and Shell “for particularly glaring cases of companies’ greed for profit and environmental sins”.
At an “award ceremony” on the sidelines of the World Economic Forum, the Swiss chapter of Greenpeace and the Berne Declaration pressure group said Goldman Sachs had won the jury prize, while Shell had been chosen by online voters for the public award.
15.50 The German chancellor has voiced her concern over currency wars, Bloomberg reports.
Bloomberg: German Chancellor Angela Merkel said the Japanese government’s call for monetary easing and central bank cash that’s been unleashed to stem Europe’s debt crisis constitute risks to the global economic recovery.
“I can’t say I’m completely free of worry when I look at Japan right now,” Merkel said today during the World Economic Forum in Davos, Switzerland, when asked if she is concerned about countries’ using exchange-rate manipulation to win global market share. China, meanwhile, has “responded quite a bit” to pressure from other Group of 20 nations to shift its exchange- rate policy, she said.
Merkel added her voice to German officials including Finance Minister Wolfgang Schaeuble who have challenged Japan for trying to devalue the yen to spur the world’s third-largest economy.
15.18 John Gapper blogs on how online learning could change the business of education:
John Gapper: Lawrence Summers, former president of Harvard and a former US Treasury secretary, said that Moocs [Massive Open Online Courses] could be “profoundly transformative”. It was “insane for calculus to be taught 10,000 times in 10,000 different classes. We are on the way to it being taught by fewer people better”.
But Bill Gates, whose foundation funds some Mooc courses, was more sceptical. He said participation rates were still very low, despite them being offered free and the knowledge they offered had always been available through textbooks.
15.12 Martin Wolf on what Merkel’s personality tells us about how the eurozone crisis will play out:
Martin Wolf: Who could have imagined — when the Iron Curtain fell, Germany was united and the Maastricht Treaty was agreed, just over two decades ago — that the dominant politician in Europe today would be a woman, who was then an East German ex-physicist?
Since the German chancellor is the ultimate outsider, it says a great deal about her country that she is its most popular politician. Germans presumably see in Mrs Merkel the qualities they want in their leader, their country and, not least, their European partners. Thus, her character — prudent, disciplined and sober — also tells you how the European Union is going to develop. Germany eschews adventurism.
Today, at the World Economic Forum, Frau Merkel repeated many familiar points. But, one of the most interesting, for me, was the remark that crises are welcome, because they force policymakers to make the necessary changes. It would be very bad if the pressure for reform was to lift.
Mrs Merkel is telling the children to eat their spinach. It may taste bad. But it will be good for them. Years of slog lie ahead. Mrs Merkel will ensure it is a slog, because, she is sure, that is the only way to improve performance in the long run.
I think of the new version of the currency union not as a federation, but as a discipline union. It is whatGermany wants. And, since Germany is the creditor country, what Germany wants, Germany gets.
15.01 Stephanie Flanders of the BBC is talking to Joseph Stiglitz about inequality.
The Nobel Prize-winning economist says there is a moral issue of inequality, but we as a society, and our economy, is paying a very high price for the magnitude of inequality in the US and the way in which it has grown. The share of national income that goes to the top 1 per cent is between 20-25 per cent. This is not inevitable and it has not always been this way, he notes.
A child’s lifetime prospects are more dependent on the income of their parents in the US than almost every other developed country.
There are some countries in the world today where inequalities are becoming less pronounced, such as Brazil.
14.50 The FT’s Chris Giles says the chancellor of the exchequer parried a question on IMF chief economist Olivier Blanchard’s calls for the UK to reassess fiscal policy (see 09.01)
14:23 George Osborne: “I want to be able to say to my children: “Don’t feel that this[the UK] is the place where the future isn’t happening.” Loud applause from the audience who clearly don’t mind hearing the same stuck record over and over.
14:19 Osborne also saying how open Britain is to foreign investors. Sure didn’t seem that way when Kraft took over Cadbury and MPs sputtered with rage.
14:18 Osborne says it is perfectly reasonable to say that when [financial services] make mistakes, you have to pay for those mistakes and you can’t expect the government to bail you out. We are taking the steps we are so that we can take the free-market step of not ringfencing failure.
14:15 Osborne now says we are sceptical about the ever closer union we were asked to join. Says we [the UK] work more closely with the French on foreign affairs (cites UK help for France on Mali) than other countries do, in the same way France and Germany work more closely together on finance and currency.
14:14 I want to see Britain as part of Europe and as part of a reformed Europe. But you can’t help seeing the growing gap between government and the governed [in EU terms]. Something has to be done about that, Osborne says on CNBC. Britain is a European country, but we want the institutions of Europe to work for the benefit of Britain and other countries of Europe.
14:11 George Osborne gleefully reminds CNBC that he and others were voices in the wilderness resisting joining the Euro and are now just relieved they were right all the time. Says he and Cameron now want to lead another argument, a positive one, in the EU again.
13:57 Tom Braithwaite, the FT’s US banking Correspondent sends this:
Angela Merkel, the German chancellor, said the core eurozone countries should not be a “closed shop” to countries like the UK.In comments at the World Economic Forum in Switzerland, which followed David Cameron’s surprise plan for a referendum on British membership of the European Union, Ms Merkel said the eurozone countries’ rules should be “binding” for themselves but “freely accessible” to other EU members such as the UK.Ms Merkel refrained from criticising the UK prime minister’s decision to offer the British public a vote on EU membership and, in one of several unprompted positive mentions of the UK, said Germany and her “friend” Mr Cameron would work together to fight tax evasion.The wide-ranging remarks to executives and policymakers at Davos proposed another attempt at a free-trade agreement between the EU and the US, which Ms Merkel acknowledged had previously foundered on disagreements about agricultural exports.Ms Merkel reiterated that growth and fiscal consolidation were “two sides of the same coin” and said other European countries needed to match Germany’s industrial competitiveness as she would not risk German exports by settling for the “lowest common denominator”.Earlier on Thursday Mr Cameron addressed the conference, defending his decision to put Britain’s EU membership to a referendum if a Conservative government wins 2015 elections.“Let’s negotiate a new settlement for Europe that works for the UK and then let’s get fresh consent for it,” he told the executives and officials in the room. “It’s not just right for the UK.It’s necessary for Europe.”
13:55 Should the EU be redefined as a permanently two-level edifice? And if so, how? That’s the question being asked by Jean-Pisani Ferry in the FT.
13.40 The German chancellor is asked directly about Cameron’s demands for a new EU settlement for non-eurozone members.
Merkel notes that elements of closer integration such as the fiscal compact and the banking union should not be seen as exclusively the preserve of euro-area states.
13.30 No rebuke for Cameron from Merkel in her speech.
Only mentions of the British PM came when she said she agreed with his point that the EU needed to become more competitive and praised his stance on tax avoidance.
The chancellor said Europe was making progress, but it was too soon to give the eurozone the all clear. She said it was vital Europe became as competitive as possible in terms of unit labour costs as this was in the long term interests of prosperity. She defended Germany’s hardline on competitiveness saying there was no alternative path.
Now to the Q&A.
13.08 Number 10 has just tweeted a picture of Cameron meeting with Merkel, who is due to speak in just under ten minutes.
12.49: Further lunchtime distractions. The FT live news desk has been sparing no effort to keep the live blog live, so to speak, and can exclusively reveal that Resilient Dynamism, the theme of Davos 2013 is an anagram of:
In laymen’s terms – id
We’re sure Freud would have known what they meant.
12.38: More Italian feedback from Gideon Rachman:
12.24: No shortage of self-confidence from Italy’s minister for economic development Corrado Passera:
12.21: While we await the next snippet of fascination from Davos (it’s lunchtime in the Alps), read the FT’s John McDermott writing this morning about how to hold a virtual WEF in your own home.
For those who like a bit of balance to their views, here in tandem are the cases for and against optimism, both written from the slopes of Davos. First, the view of the sunlit uplands from the FT’s Martin Wolf.
Next, Nouriel Roubini looks through a glass darkly.
11.54: The FT’s chief foreign affairs commentator Gideon Rachman reports from Davos that the organisers of the WEF have some very modern concerns.
They are worried that the tag-line #Davos is now being used by porn sites, something that commonly occurs when topics trend strongly.
Meanwhile, the informal competition to be top Davos Tweeter is currently being won by the Indonesian president, for reasons no one can nail down.
Gideon also reports scepticism about David Cameron’s promises to promote lots of economic themes via the UK’s G8 presidency.
As one international civil servant put it – all that’s meant to be the G20. The G8 is meant to be just strategy.
That same scepticism can be easily read in political scientist Ian Bremmer’s most recent Davos tweet:
11.15: That session is now finished.
For more discussion of the Cameron speech on Europe, here is an FT video on a “risky strategy”…
…and here is the FT’s leader on the matter.
11.06: Barber asks if the measures proposed to save the Eurozone will need treaty change. Rutte and Kenny say in the medium term, but not now. Thorning-Schmidt and Monti say just no.
Rutte says other treaty changes could happen “at the level of the 27″ ie with unanimity. Monti says it is important that any people asked about the nature of their relationship with Europe should be asked “the full question – in or out”. Otherwise it threatens to paralyse the others.
11.02: The Danish prime minister Thorning-Schmidt says Cameron’s call for renegotiation is a legitimate discussion, but makes clear she doesn’t share the depth of the UK’s concerns over the future of Europe.
11.00: Not much love (but a bit of sympathy) for Cameron’s speech from his fellow prime ministers on the Davos stage.
10.58: Rutte gets down with the kids, saying that the EU can be like Hotel California – “You can check out but you can never leave” – but says he is opposed to one country seeking opt-outs for itself.
He says the UK would be “an isolated island out in the Atlantic somewhere between the US and Europe” if it left the EU.
10.54 Enda Kenny is reluctant to take up an invitation from the floor to say if he would like to repatriate powers. We should deal with the consequences of our current crisis first, he says. But he says there could be treaty change in the years to come because everything is changing so fast.
It is countries that can deal with riding the waves before they actually happen that will make the biggest impact. I am not concerned about repatriation of powers, but about leading ourselves to a much brighter future.
10.49: The Cameron speech at Davos can be found at this link.
10.45: Rutte adds that he thinks free trade agreements between the EU and the US are more likely following the re-election of President Obama.
10.44: The Dutch prime minister Mark Rutte says that like the UK he sees the common market as the “first and foremost” interest his country has in the EU. But he urges Britain not only to stay in but to be very active in the union.
10.41: Helle Thorning-Schmidt, the Danish prime minister, says:
We have had different choices within the EU and we chose the solidarity path. Everytime we take a decision on strengtheing the EU, the Euro countries have chosen a policy of the open door.
That means countries like my own always know, that although we have different paces, there is an open door for the non-Euro countries – for instance, with the fiscal pact. The banking union debate is also open to non-Euro countries.
10.36: Here is Chris Giles on the Cameron speech this morning:
David Cameron came to Davos with a tricky balancing act. Davos business types tend to be very supportive of his pro-business views, but they are also generally pro-European integration. The prime minister received a lukewarm reception even when he tried to tickle the audience saying, “I yield to no one in my enthusiam for capitalism”.
He came to Davos wanting to outline the UK’s agenda for the G8 this year, sell Britain as a place to invest and say something about Britain’s proposed referendum on EU membership. The audience noticed the apparent contradiction between his sales pitch and the potential problem that there will be five years of uncertainty over EU status and moral suasion to pay more tax.
Cameron’s anwer was the following. In the EU, everything is changing with the integration of eurozone countries, so it is reasonable for Britain to ask for some changes in the relationships too. What Britain will seek remains vague. And companies and individuals who pay tax have to pay more if others engage in aggressive tax avoidance.
Most of Cameron’s speech was couched in his favourite catchphrase that “Britain is engagged in a global race”, adapted to say that the EU or the G8 is engaged in a global race and therefore need to change.
On the G8, the prime minister noted it was the right body to try to agree new measures to crack down on tax evasion and aggressive tax avoidance, saying that many opportunities for avoidance come from international differences in tax structures. He rather spoilt the international co-operative spirit at the end, by selling Britain as a country with very low corporate tax rates and a new patent tax regime with even lower rates, just the sort of element likely to atract corporate tax planners.
10.30: Monti tells Barber that Italy has introduced more competition in the functioning of its markets – for example in the liberal professions and the separation between gas production and gas distribution.
I believe that no individual country in Europe, not even the largest ones, can keep a momentum towards growth unless the policies are refocused on growth.
We have been insisting daily on the single market being taken more seriously. We all know there isn’t really a single market for energy or digital services in Europe.
10.26: Attention at Davos’ main stage has moved to a high-level panel, chaired by the FT’s editor Lionel Barber, and including prime ministers Mario Monti of Italy and Enda Kenny of Ireland, on how to solve the eurozone debt crisis
10.21: Cameron made a little joke in his speech when he said that those companies in the UK that did not pay enough corporation tax should “wake up and smell the coffee” – a sideswipe at Starbucks, one of three big US corporations that were the focus of negative publicity on the topic last year. Ironically, Starbucks was the one that reacted most to the government’s criticism, agreeing to pay £20m even though, legally, it does not owe it.
10.16: Cameron’s parting shot to Davos was this:
Political will is what matters. Britain is a major European player on all the issues where Europe needs to act. But a centralised political union is not for me, not for Britain.
10.13: The FT’s economics editor Chris Giles had this to Tweet on Cameron’s reception from the audience:
10.09: Cameron resists the criticism, saying the UK is going to be a low-tax environment for businesses and will be negotiating a better deal with the EU which will benefit business as well.
10.06: Stephanie Flanders, economics editor of the BBC, gets the mic, to a bit of a harrumph from the UK prime minister, and asks how attractive his offer to businesses to come to the UK will be when he has sent out messages that the country may be leaving the EU trade area and that they will have to pay more tax. Her question gets a little ripple of laughter/applause.
10.04: Cameron’s Twitter feed is backing up his “come and do business in Britain” message at Davos:
09.59: Cameron is taking questions now, having called for motherhood and apple pie: less corruption, more transparency in developing nations; less tax evasion; more trade; the EU to improve its efficiency and embolden the single market. He described himself as the most business friendly politician you can find.
09.51 As the British PM continues his remarks, the FT’s Martin Wolf writes that Cameron has set the UK towards a path of EU exit.
Martin Wolf: The future of the UK in the European Union is, of course, already a subject of fierce debate. Everybody can see that the chances of a British departure have increased. The question is by how much.
I was interested to discover from a private conversation with a very
senior continental official that his worry is that the rest of the
European Union really does not need this diversion of attention from its immediate concern, which is the reform of the eurozone.
He referred to two specific risks.
First, he is worried that the very fact that the UK may be on the way out will shake confidence in the future of the eurozone. As he noted, people in Asia or the Americas do not understand the details. They will just regard this British decision as calling into question the vitality of the European project, partly, no doubt, because the UK has deep relations with these parts of the world.
Second, this is going to open up a “second front” in the war for the reform and strengthening of the eurozone. The leaders of the eurozone have, he felt, quite enough on their plates already!
The point is that Mr Cameron has, in his wisdom (or, in my view, his extreme folly) opened up a Pandora’s box. He has set a process under way over which nobody can have control.
The negotiations he wishes to launch are sure to create profound irritation among his partners, all of whom have far better things to do, at head of government level, than to talk of fish (to take an example given by my interlocutor).
There is a high chance that the irritation would lead to reluctance among European leaders to negotiate seriously (even if the UK demands were seen as tolerable, which many probably will not be). This, in turn, would make it harder to sell any outcome as a “victory” for the UK. And that in turn would demolish Mr Cameron’s strategy, since, I believe, he really does want to stay inside the EU.
Yet my guess is that Mr Cameron has instead set the UK on the path to exit. I would not be surprised if we soon hear some European leaders saying: the door is open; please close it on your way out.
09.42 A little over ten minutes in and the British PM hasn’t swerved the topic of Europe. He says Europe is not competitive enough and that the debate on its future is “live”. Quite. His comments are more favourable on the UK. “We are a global nation,” he says, before talking about global tax avoidance:
Cameron calls from officials around the world to act together to stop avoidance.
09.29 David Cameron will begin speaking in a moment. Ahead of his comments, Jasmine Whitbread has this to say:
Jasmine Whitbread: David Cameron’s speech yesterday was a source of much speculation, interpretation and voicing of opinions here at Davos, even though delivered in London. This is hardly surprising when so much hangs in the balance, not just for the future of the UK but for Europe too.
A lot is also at stake in the UK prime minister’s next speech, starting soon here. Some 2.3 million children’s lives each year, 20 percent of earning power and up to 3 percent of countries’ GDPs. This is the impact of global malnutrition on today’s children and tomorrow’s workforce.
09.24 You might be able to lead people to Davos, but you can’t make them talk to one another. Jasmine Whitbread, CEO of Save the Children, writes that attendees tend to keep to their own kind at the event.
Jasmine Whitbread: The funny thing about the whole concept of the World Economic Forum bringing together all these different people from different countries and sectors, is that I’m not sure they actually talk to each other.
At a lunch on East vs (sic) West the packed room looked pretty thin on non-anglos, while a series of men offered mono focal views of just Europe, just China and just the US (and at the end a prominent FT journalist pronounced that he had never heard such outrageous claims).
I noticed today (prompted by a trek out of town to meet the Ethiopians) that different continents hang out in different hotels. An exception would be my hotel where there are fellow Brits plus Koreans – but we never talk and breakfast is conducted in eerie silence.
09.17 A typically sardonic tweet from @DavosDeville on this morning’s line-up:
09.14 Former US secretary of state Henry Kissinger is another of the big names who has been talking this morning. Kissinger explained the difficulties facing the international community with regard to Syria:
09.01 The BBC reported this morning that the IMF has called for the UK government to ease off on austerity and implement a plan B of slower deficit reduction. The BBC had an interview with Olivier Blanchard, IMF chief economist and the story was based on his comment, “we said that if things look bad at the start of 2013 — which they do — then there should be a reassessment of fiscal policy”. The FT’s Chris Giles doesn’t think the IMF has changed its stance, however. Here are Chris’s four reasons to treat this interview with great caution:
Chris Giles: 1. By chance, the IMF support staff to Christine Lagarde, IMF managing director, were sitting at the table next to The FT at breakfast. The IMF’s lead spokesman said there was no change in its position. He said there was no change in the formal assessment of the UK and one was not imminent.
2. Ms Lagarde sat next to George Osborne, UK chancellor, at dinner last night and did not suggest a change of course.
3. Mr Blanchard is not the IMF. IMF officials have lots of different views, as is normal and proper in a large bureaucracy and it is well known that Mr Blanchard is more favourable to slower deficit reduction than his boss or the IMF itself. Remember, the IMF is not a global government, but a membership organisation and any recommendation for different fiscal policy in the UK has to come from the board, which is attended by member governments, not IMF officials.
4. For technical reasons, there is often no contradiction with an IMF plan B and no change of tax or spending policy within the UK. The reason is because the IMF measures fiscal consolidation by the change in the structural deficit. Because the UK has downgraded its own assessment of potential growth, it has cut the annual planned reduction in estimated structural deficit without changing policies. We now need more years of “less” austerity to get rid of the deficit. In Britain, we tend to describe this as an extension of austerity. But in the IMF lingo, it is a weakening in fiscal consolidation. This is the reason the IMF praised the UK last year for moderating austerity in 2012, when the Treasury made no change in any significant tax or spending plans.
08.47 London’s mayor Boris Johnson isn’t the staunchest ally of the British PM. But he supports Cameron on Europe, writes the FT’s Patrick Jenkins:
Patrick Jenkins: Boris Johnson was standing by his party leader on Thursday. On the fringes of the Davos forum, the mayor of London told the FT that City bankers were being nonsensical in criticising David Cameron’s referendum pledge on Europe.
Bankers argue the uncertainty that will hang over the UK’s membership of the EU will harm Britain’s financial services industry and broader business interests. But Mr Johnson, who normally takes a supportive stance towards City bankers, said: “If it were left to them there’d never be any elections. That’s the only way to get total certainty.”
08.31 The influential flash reading of the purchasing managers’ index for the French economy is out and it’s awful. The PMI, which measures economic activity, fell to its lowest level since April 2009, signalling France’s economy is contracting at its fastest pace in almost four years.
- Flash France Composite Output Index(1) drops to 42.7 (44.6 in December), 46-month low
- Flash France Services Activity Index(2) falls to 43.6 (45.2 in December), 46-month low
A PMI of below 50 signals a contraction in activity.
Conditions look a lot better in Germany, however. The flash PMI for Europe’s largest economy rose to its highest level for a year.
- Flash Germany Composite Output Index(1) at 53.6 (50.3 in December), 12-month high.
- Flash Germany Services Activity Index(2) at 55.3 (52.0 in December), 19-month high.
08.23 In between Cameron and Merkel, other highlights include a panel on the eurozone crisis featuring no fewer than four heads of state. The line-up is Ireland’s Taoiseach Enda Kenny, Italian PM Mario Monti, Polish PM Donald Tusk, and Dutch PM Mark Rutte. The FT’s Lionel Barber will chair the discussion, which begins at 10am UK time.
British chancellor George Osborne and European Commissioner for Economic and Monetary Affairs Olli Rehn share the stage with Philipp Rösler, Germany’s vice chancellor, at 11.30am in a session chaired by the FT’s Martin Wolf.
08.05 Hello and welcome to the second day of our live coverage of Davos. Among the heavyweights speaking today are David Cameron and Angela Merkel. The British PM’s address is at 9.30am UK time (10.30am in Davos), with the German chancellor following him at 1.15pm this afternoon.
Cameron’s speech on Tuesday morning, which promised an in/out referendum by 2017, was one of the key themes of yesterday’s discussions.