Rolling coverage of the latest economic and financial news, as the World Economic Forum outlines its 2020 Risks Report
- Cheaper clothing drags inflation down
- Environmental dangers are top long-term threat to world economy
- Climate emergency warning ahead of Davos
- US-China trade deal signing today
- Mnuchin: Tariffs remain until Phase Two is agreed
- Analyst: It’s the theatre of the absurd
WEF have tweeted about their Risks Report (which is online here).
The Global Risks Report 2020 launches today and for the first time, the top spots are dominated by environmental concerns. After a year of extreme weather, people are more worried about the planet’s future than ever. Read the full report here https://t.co/BFcO7Vsmay #risks20 pic.twitter.com/HWS3VW5LdS
Top decision makers under the age of 40 have particularly strong concerns about climate, today’s WEF Risks Report has found.
The report highlights how risks are seen by those born after 1980. They ranked environmental risks higher than other respondents, in the short- and long- terms.
Almost 90% of these respondents believe “extreme heat waves”, “destruction of ecosystems” and “health impacted by pollution” will be aggravated in 2020; compared to 77%, 76% and 67% respectively for other generations. They also believe that the impact from environmental risks by 2030 will be more catastrophic and more likely.
We know what the challenge is, we need to get on and address it.
WEF’s Risks Report has also predicted that 2020 will see rising political and social tensions, both within countries and between them.
So with the added risk of economic slowdown, it could be a turbulent year.
National politics in many countries has evidenced intense divisiveness and ‘pushbacks’, coupled with increasingly fractious international relations. These volatilities will likely persist, challenging cooperation on key priorities.
As economic confrontations between major powers grow, the global economy shows greater signs of a concerted slowdown.
Weak international agreements belie rising investor and popular pressure for action, against a backdrop of a multitude of natural catastrophes and indicators of longer-term disruptions. 2020 is a critical year for nations to accelerate progress towards major emissions reductions and boosting adaption investments.
Many ecosystems are in decline or at risk of distinction. Biodiversity loss poses irreversible consequences to societies, economies, and the health of the planet.
Emerging technology risks can erode social discourse, threaten economic stability, exacerbate geostrategic competition, and pressure national and international security. Getting a better handle on systemic risks will require a significant technology governance refresh at all levels.
Changing societal, environmental, demographic, and technological trends are straining health systems globally. While transformative technology, medicines, and insurance can improve healthcare, they also introduce new risks and trade-offs.
Britain’s weak inflation is likely to spur the Bank of England to cut interest rates this month, says Garry Young of economic thinktank NIESR.
But he’s not convinced they should….
Our @GarryYoung5 on #CPI figures: “The drop in 12-month CPI #inflation to 1.3%, plus weak GDP data, is likely to confirm the need for an immediate rate cut in the minds of a majority of MPC members. Whether this is really necessary is more debateable.” Full analysis out shortly
The surprise fall in UK inflation to 1.3% has knocked the pound back below $1.30.
Traders are (understandably) concluding that an interest rate cut is more likely.
Eurozone Nov trade surplus rises to EUR 20.7 bn y/y very little reaction from #EURUSD
Levels to watch: 1.1189 1.1167 above, 1.1085 1.1066 below pic.twitter.com/noaR6HSiHP
The Bank of England has been studiously steering interest rate expectations lower, but this morning’s collapse in core inflation further increased the likelihood that rates will be cut to 0.5% when the MPC meets on 30th January.
Core inflation is now back at the levels last seen in 2016.”
Shops slashed women’s clothing prices particularly sharply last month, the Office for National Statistics says:
The largest individual downward contributions came from women’s casual jackets and cardigans, where prices fell between November and December 2019 but rose between the same two months in 2018.
There were also small individual downward contributions from formal trousers and formal skirts.
Britain’s inflation rate has fallen to a three-year low, making an early interest rate cut increasingly likely.
The Consumer Prices Index fell to just 1.3% in December, down from 1.5% in November, to its lowest since November 2016. That’s some way below the Bank of England’s target of 2%.
Q: Is China engaging enough on these issues?
Brende replies that it is crucial that China is a part of the global fight against climate.
Børge Brende, president of the World Economic Forum, warns that policymakers only have 10 years to address the climate emergency – otherwise they’ll just be “moving deckchairs on the Titanic”.
But he’s also optimistic, pointing out that the cost of solar energy is 10 times as cheap as a decade ago. A lot can happen in 10 years, if people react.
Here are some key charts from WEF’s risks report, showing how environmental issues (coloured green) are now seen as the biggest threat to the global economy.
WEF are now taking questions…. firstly from my colleague Larry Elliott.
Q: Next week, lots of the CEOs who say they want to fight the climate emergency will be flying to Davos in their private jets – isn’t there a major reality gap here?
There’s nothing worse than an organisation recognising a risk and doing nothing about it, which is why we take it so seriously.
Biodiversity loss and a warming planet are linked, Giger adds — one can lead to the other.
Businesses, consumers and regulators….need to prioritise investments that protect the planet.
Peter Giger, Zurich’s group chief risk officer, says the loss of biodiversity is a very serious risk to the global economy.
We rely on biodiversity, from pollinating crops to curing diseases.
John Drzik, chairman of financial service firm Marsh & McLennan Insights, is now speaking at the Global Risks report press conference.
He says there is mounting pressure on the public sector to act on environmental risks, in the face of rising threats.
The World Economic Forum is outlining its Risks Report at a press conference in London now.
The first chapter is called “An Unsettled World” – focusing on the current fractured global situation. This is making it harder to tackle issues such as the climate emergency.
It is the super-risk. All the other risks that we need to contend with, there is this drag that we have to contend with – that we live in a more polarised, more competitive world.
A conservative estimate says we are losing 200 to 2,000 species per year — this is an issue of critical importance.
NEWSFLASH: the World Economic Forum’s new global risks report is out!
And for first time in its 15 year history, the top five global risks to the global economy over the next decade are all related to the environment.
Michael Saunders has also produced this chart, showing why he believes UK interest rates should be cut:
Newsflash: Bank of England policymaker Michael Saunders has warned that the UK economy appears to be stagnating.
Speaking in Northern Ireland right now, Saunders says that is recent business surveys suggest there is ‘little or no growth’ in the British economy right now.
“It probably will be appropriate to maintain an expansionary monetary policy stance and possibly to cut rates further, in order to reduce risks of a sustained undershoot of the 2% inflation target.
With limited monetary policy space, risk management considerations favour a relatively prompt and aggressive response to downside risks at present.”
#BOE #MPC – Dovish comments by #Saunders who was one of the 2 MPC members who voted for #interest rates to be cut from 0.75% to 0.50% at December meeting; looks certain to repeat vote for a 25bp cut on 30 January. #BankofEngland #interestrates https://t.co/ScUWv1kGVF
Unusually, the full text of the Phase One trade deal hasn’t been released yet.
But Reuters has heard some details:
China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years as part of a trade war truce, according to a source, though some U.S. trade experts call it an unrealistic target.
Under the Phase 1 trade deal to be signed on Wednesday in Washington, China would also buy over $50 billion more in energy supplies and boost purchases of U.S. services by about $35 billion over the same period, the source, who was briefed on the deal, told Reuters late on Monday.
Donald Trump famously claimed that trade wars were good and easy to win.
We’re still stuck with these tariffs which are a drag on growth in trade and manufacturing
These tariffs have now become a roach motel.”
Asia-Pacific stocks have been hit by America’s refusal to lift tariffs on Chinese goods.
Almost all the major indices are in the red, as traders face up to the prospect of more trade tensions this year.
Equity benchmark Sensex dropped nearly 200 points in opening session on Wednesday as global investor sentiment dampened after the US said its initial trade deal with China does not include tariff rollback.@BSEIndia @ashishchauhan pic.twitter.com/YuZrOAekfb
Global stocks tick lower ahead of US-China Phase 1 deal signing as tariffs stay until there is Phase 2 agreement. Investors’ mood remains cautious as #China injects another $58bn to banking system. Bonds higher w/US10y yields at 1.80%. #Gold higher at 1551. #Bitcoin at $8.7k. pic.twitter.com/CgtLErj1Em
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
“These tariffs will stay in place until there is a Phase 2. If the president gets a Phase 2 in place quickly, he’ll consider releasing tariffs as part of Phase 2.”
The US – China trade deal is like watching a live show in the theatre of the absurd. The Trump administration revealed a detail that nobody expected just before the signature of the phase-one trade deal today: the tariff cuts will not take effect before the US election in November.
This means that the US tariffs will continue weighing on Chinese exports for almost an additional year, while the emerging market giant will certainly be asked to deliver on its promise to buy massive amounts of US farm goods and manufactured products immediately. The risk here is that the double-standard agreement could provide a weak basis for the future negotiations, impair the benefits, or even spoil the deal.
Link : Climate emergency tops global risks; UK inflation sinks – business live