This article titled “Davos 2018: Theresa May and Donald Trump to meet – live updates” was written by Graeme Wearden in Davos and Nick Fletcher, for theguardian.com on Thursday 25th January 2018 16.25 Asia/Kolkata
Hammond: Brexit deal needs to cover services to be fair
Chancellor Philip Hammond has told the Davos panel on financial risks that Europe will lose out if the City suffers after Brexit.
New York and Singapore would benefit from new business, he says, not European cities.
The idea that you can recreate London’s financial centre anywhere else is a fantasy.
Hammond also says that financial services are very important to the UK side, and “the centre of our negotiating strategy”.
Those who say the financial sector will not be part of a deal have not been looking at the numbers, he says.
We have a trade deficit of £100bn with Europe, and a surplus in services of £40bn, Hammond explains, adding:
The only deal that can be done is one that can be fair to both parties
One that included trade and not services would not be fair to the UK.
Theresa May and her entourage have just swept through the Davos congress centre, into a private meeting room.
Alas media are certainly not allowed in to listen.
Treasury secretary Mnuchin: We want fair trade
Trump’s treasury secretary, Stephen Mnuchin is also on the panel on the future of finance.
Yesterday, Mnuchin sent the dollar tumbling by saying a weak currency is good for exports.
Today, he’s very relaxed about the whole issue, saying:
“In the short term where the dollar is is not a concern of mine. It is not something I spend a lot of time thinking about.”
Mnuchin also denies that America is trying to launch a trade war, insisting that the US doesn’t want less trade it wants “fair trade”.
The big debate on financial stability is also underway.
Christine Lagarde, managing director of the IMF, says trade is one of the factors leading to stronger growth.
When asked about the risks of a trade war, she says:
“Who would want to do anything that would lead to weaker growth?
Gore: Trump can’t stop US climate change push
Al Gore, former US vice-president, has suggested that Donald Trump can’t disrupt the battle against climate change – especially if he isn’t reelected in 2020.
Speaking on a panel here in Davos, Gore says there is strong momentum to fight climate change.
Several governors of our largest states, hundreds of cities, and thousands of US businesses are now ensuring that the US will not just meet, but exceed, the commitments it made in the Paris Agreement.
Gore explains that America can’t legally leave the Paris Agreement (to act to limit rising global temperatures) until after the next presidential election.
And if there’s a new president (at which point Al Gore offers a silent prayer), they could give 30 days notice and America would be back in the agreement.
That’s the good news.
The bad news, Gore says, is that the maximum action that is political feasible falls far short of the minimum of what is needed to battle climate change.
So, we need to move the boundary of what politicians can do.
You can watch the panel live, here.
Back in the UK, and mortgage approvals by Britain’s banks fell to their lowest level since April 2013 in December, according to trade association UK Finance.
Banks approved 36,115 mortgages for housebuying, down from 39,007 in November and 19% lower than a year ago. Annual growth in consumer credit slipped from 0.8% to 0.7%.
And this could give the Bank of England a problem:
Newsflash: Theresa May has met with South Africa’s deputy president, Cyril Ramaphosa…..and there’s not a fondue dish in sight either.
Theresa May accused of favouring fondue over flesh-pressing
Theresa May’s former press chief has caused a stir this morning, accusing the PM of spending last year’s Davos “sitting in a hotel eating fondue” rather than meeting fellow world leaders and business chiefs.
Writing in The Times, Katy Perrior claims the PM struggled to schmooze at the 2017 World Economic Forum, and even turned up with the wrong sort of footwear (her new £120 snowboots should work better this time).
Perrior claiming business leaders were frozen out by May:
‘Elsewhere they get personal audiences with President Macron in France and Malcolm Turnbull in Australia but not so much as a digestive biscuit from the PM.
‘Does she have any idea how frustrating that is for them? Other world leaders are on a charm offensive, desperate to woo major businesses to their shores.
‘As we count down to post-Brexit Britain, she would do well to spend less time enjoying the fondue and more time meeting and greeting.’
Personally, I was disappointed not to see May meeting business chiefs and academics at Oxford University’s excellent Davos cheese and port party last night (maybe I left too early #bestbehaviour )
Perrior also claims May turned down the chance to meet Alibaba’s Jack Ma last year. He’s still at Davos, so there’s still time to make amends, prime minister…
Kristin Lemkau, JP Morgan’s chief marketing officer, sums up Davos so far:
Pound hits $1.43
Sterling continues to go from strength to strength. In Asia overnight it hit $1.4328, and although it has eased back from that, it is still up 0.11% so far today at $1.4255.
It is partly the expectation of an earlier than expected UK rate rise, given the recent strong data including Wednesday’s employment and wages figures. But of course there is also the weak dollar, hit recently by the expectation that Donald Trump’s tax cuts would raise the already hefty US deficit. More immediately Treasury secretary Steven Mnuchin told Davos the US wasn’t worried about a flagging greenback. Kit Juckes at Societe Generale said:
Steven Mnuchin (US Treasury Secretary) went to Davos and said that a weaker dollar ‘is good for us as it relates to trade and opportunities’. He also pointed out that that he isn’t concerned by where it is in the short term and that in the longer term, its strength is a reflection of the strength of the US economy. In other words, he said very little really, but he said it under snow-plastered slopes and he was speaking to a market where dollar bulls have been under the cosh. A few more capitulated.
Against the euro the pound is pretty flat, down just 0.01% at €1.1473 ahead of the latest European Central Bank meeting. But the euro is up against the dollar, 0.11% better at $1.2421.
The strength of the euro presents a problem for ECB president Mario Draghi. If he appears too bulllish at hinting at an end to the bank’s QE programme, the euro will appreciate even further. And that would keep a lid on inflation which is already below the bank’s target. Equally, he cannot ignore the improving European economy. Michael Hewson at CMC Markets explains:
With headline inflation remaining well below its 2% target rate at 1.4% and an economy that continues to show decent levels of economic activity the ECB is faced with having to navigate the minefield of guiding markets over the tightrope of communicating a credible timeline for stimulus reduction and interest rate policy, while trying to move CPI back to target against the difficulty of a rising currency.
Since the beginning of 2017 the euro has risen 18% against the US dollar and could well rise even further given yesterday’s remarks by US Treasury Secretary Mnuchin.
Last week ECB vice president Vitor Constancio along with Austria’s Ewald Nowotny expressed concern about recent exchange rate movements. These concerns are likely to have increased in recent days which will make today’s press conference by ECB President Mario Draghi much more interesting. He can’t very well ignore the improving outlook but if he comes across as too bullish the euro could well be well on the way to the 1.3000 level by the end of this quarter.
Naeem Aslam, chief market analyst at Think Markets, said:
Draghi would have to adopt a delicate approach and seek a strategy which stops the euro from firming further. The only way out of this situation for him would be to emphasize that the process of the rate hikes is not within sight yet. The market is expecting a rate hike in 2019 from the ECB, Draghi would have to pull a rabbit out of hat in order to convince the market that rate hike isn’t on the agenda and market participants are getting ahead of themselves.
We do think that overly dovish statement by the European central bank is priced in the euro to some extent. If Draghi fails to convince the market or if he doesn’t sound as dovish as the market is expecting, we think that the euro can take off from here. I think the risk to the downside for the euro are limited, it is the upside move which would be more exciting.
Theresa May’s Conservative Party has confirmed she will hold social media giants to account in Davos:
Bruce Carnegie-Brown, chairman of Lloyd’s, says that companies are taking out more insurance against cyber attacks.
“It is the fastest growing part of our business”, Carnegie-Brown says, adding:
“Companies are certainly becoming more concerned about the risks.”
Lloyd’s has 30% of the global market, Carnegie-Brown says, with 85% of the business coming from US firms. The insurance market is changing, he says.
“People are more concerned about cyber attack than a fire when it comes to the potential impact on their business.”
Carnegie-Brown says he has been floating the idea in Davos that governments might use part of their aid budgets to insure poor developing countries against the cost of natural disasters.
Lloyd’s will pay out almost $5b to the US states affected by the three hurricanes last year but says the world as a whole is under-insured.
Malala also warns that world leaders need to invest more in education, to help future generations.
Malala: Harassment against women is shocking
Malala Yousafzai, the world’s youngest Nobel Prize winner, is speaking at Davos right now, about the importance of giving girls equal rights to education.
She’s explaining that education can play a key role in improving giving the message of equality.
So what’s your message to Trump on the issue of gender equality, asks Miriam Elder of Buzzfeed.
I get so disappointed to see that people in these high positions openly talk against women, do not accept women as equals, they harass woman.
It is just shocking to think that is is happening
I hope that women stand up and speak out against it.
I hope that people who are involved in such shameful things think about their own daughters, their own mothers, their own close female relations, and just imagine for a second, could they let it happen to them?
I don’t think they would accept that.
Malala, who was shot by the Taliban in 2012 after campaigning for girls education, says women must “raise up their voice”, and reach the ears and minds of those who still hold views which we hoped didn’t exist any more
Hammond: We’re happy with sterling’s strength
Just in: chancellor Philip Hammond says he’s “very happy” with the strength of sterling, which has hit its highest level since the Brexit vote.
Foreign exchange rates are a big story at Davos, after America’s Treasury secretary Stephen Mnuchin seemed to hint that Washington liked a weaker dollar
Some of President’s Trump’s top officials are briefing the press again this morning.
Commerce secretary Wilbur Ross is in combative mood, denying that America is protectionist – even though it just slapped new tariffs on washing machines and solar panels from Asia.
Ross also says that America is “more interested” in bilateral trade deals than multilateral ones – which doesn’t bode very well for the ongoing NAFTA negotiations.
John McDonnell, Labour’s shadow chancellor, is also in Davos, and bringing a warning for the global elite:
McDonnell will be telling top business people and world leaders that they’re dangerously insulated from the problems outside WEF’s security cordon and swanky parties:
“Many of those attending the World Economic Forum have been patting themselves on the back as international growth figures have begun to pick up.
“But they should be worried. In the real world, outside the Davos bubble of Alpine restaurants and chalets, the global economic system they have built isn’t working for billions of people.
“And just as Davos faces the risk of an avalanche this week, growth for a few risks a political and social avalanche unless there is fundamental change to our rigged economic system.
Hammond: We must embrace AI, not fight it
Philip Hammond, the UK’s chancellor of the Exchequer, is also at Davos.
He’s been giving his views about artificial intelligence at a Microsoft breakfast, saying:
“We are at the point where computers move from being dumb and fast to being smart and fast.”
Hammond says AI is going to be disruptive and managing the process is the key to it being accepted, warning:
“To many it will seem to be a big threat to their prosperity and livelihoods”.
Losers would include members of the middle class but it was important to embrace the new technology rather than resist
“Let’s not create a generation of 21st Century Luddites who feel the only chance of survival is to resist change.”
Hammond said AI would affect the jobs market, would disrupt business models and had ethical dimensions including privacy and the way new technology could be used in wars.
“The choice is simple: do we look inward or outward, look to the future or cleave to the past?”
Here are some photos of Donald Trump setting off to Davos last night:
The agenda: May and Trump to meet
Good morning from Davos.
It’s another big day at the World Economic Forum, with Theresa May giving a keynote speech this afternoon – and meeting Donald Trump on the sidelines.
The UK PM is expected to put technology giants under pressure to clean up their act and tackle extreme content.
Investors can make a big difference here by ensuring trust and safety issues are being properly considered. And I urge them to do so.
These companies simply cannot stand by while their platforms are used to facilitate child abuse, modern slavery or the spreading of terrorist and extremist content.”
Her meeting with Trump will be a chance to talk trade after Brexit, discuss terrorism, and perhaps patch up that Special Relationship after the row over the US embassy.
As Beth Rigby from Sky News puts it:
The two leaders are expected to focus on areas where there is common ground in international affairs: North Korea, as well as eradicating Islamic State in Syria and northern Iraq.
They might touch on Iran. But the thornier issue of Russian aggression in Europe is less likely to be raised as the Prime Minister seeks to soothe relations and not stoke further tensions.
President Trump set off for Davos last night – part of the biggest US delegation ever. We’ll be hearing more from his team this morning.
There’s also masses of other events, covering gender equality, financial stability, tax avoidance and climate change.
Here are some highlights coming up today
- 9am Davos (8am UK): Malala Yousafzai on girls education
- 9.15am Davos: Debate: could rogue technology kill us all?
- 10.30am Davos: A speech by King Abdullah II of Jordan
- 11am Davos: Debate: How should leaders fighting climate change, with Greenpeace boss Jennifer Morgan and Al Gore
- 11am Davos: Debate: How to remake global finance, with IMF chief Christine Lagarde, chancellor Philip Hammond, US treasury secretary Steven Mnuchin, Larry Fink
- 2pm Davos: Special address by prime minister Theresa May
- 3pm Davos: Debate: Beyond the Paradise Papers: Can Global Tax Avoidance Be Stopped?
- 4pm Davos: A speech by Benjamin Netanyahu
- 6pm Davos: Are cryptocurrencies going to cause a financial crisis?
- 6.30pm Davos: A debate on global warming
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