Over in Davos, climate protesters marched to the ski resort yesterday to highlight the escalating climate crisis.
It will be interesting to see how much of this is filtering through to the official event. At 1pm GMT, the World Economic Forum’s founder and executive chairman Klaus Schwab and other WEF officials will hold a press conference to outline this year’s programme and participants. Many will be flying in on their private jets, thereby contributing to the climate crisis.
Back in the UK, pressure on households appears to have eased somewhat, with the household finance index from IHS Markit hitting a one-year high in January. It measures households’ perceptions of financial wellbeing and rose to 44.6 from 43.2 in December, suggesting a post-election bounce.
However, the index measuring future financial wellbeing dipped back into negative territory follow a slight improvement in December. Almost one in four households think that the Bank of England’s next move will be a rate cut.
The index is based on survey data collected by Ipsos Mori and is the first consumer survey published each month.
Joe Hayes, economist at IHS Markit, said:
Latest survey data certainly show some post-election bounce for UK households, with the headline index up to a one-year high and house price expectations at their strongest since October 2018. That said, cooling inflation was most likely the real driving force, propping up real earnings and disposable incomes.
“While falling living cost pressures are stimulating purchasing power, UK households are aware that weak economic conditions have led to an increased likelihood of lower interest rates. How this will impact consumer spending behaviour will be crucial to the UK’s growth prospects.”
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And here is a list of the political leaders and leaders from international organisations, trade unions, charities and NGOs, who are attending Davos. There will be “10 leaders under the age of 20” including the Swedish climate activist Greta Thunberg, who might square up to US president Donald Trump who is also flying in.
Running alongside the daytime discussions, schmoozing and night-time partying, there is an arts and culture festival for the first time with a number of sessions and “immersive art installations”. Cultural leaders attending Davos include the cellist Yo-Yo Ma and Cambridge university professor Mary Beard.
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Trading volumes are thin as US markets will be closed for Martin Luther King Day.
In London, the shopping centre firm Intu, which owns the Trafford centre in Manchester and Lakeside in Essex, suffered a 7% fall in its share price after confirming that it was in talks with investors about a fund raising by the end of February to shore up its battered finances. It is thought to be looking to raise as much as £1bn, although the company’s market value is only £288m. Intu has been hit as a number of well-known retailers have gone under or negotiated rent reductions in a bid to stay alive.
Tonic maker Fever-Tree, the former stock market darling, has seen its shares slump 21% today, the lowest level since April 2017. It admitted that trading had been tough in the UK over Christmas and blamed general belt-tightening among consumers, although it remains the market leader with its premium drinks mixers. The company now expects 2019 profits to be 5% below 2018, when it enjoyed a 34% jump in pre-tax profits to £75.6m.
Annual revenues are now set to come in at £260.5m, lower than expected. This equates to a 10% year-on-year growth rate, well below the 40% surge in sales seen in 2018. Fever-Tree already cut its sales outlook in November. Tim Warrillow, the chief executive and co-founder, said then that the company would hold off heavy promotional discounting over the Christmas period.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, says:
Falling sales in the UK will inevitably spark fears the gin boom has turned to bust, while guidance for weaker sales in the US and lower margins undermine Fevertree’s long term pitch that it can replicate its success across the pond.
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The climate crisis will loom large over Davos, and Mark Carney, who becomes the new UN special envoy for climate change and finance once his term as governor of the Bank of England ends in mid-March, will be attending. He will also be the UK’s key adviser for the next UN climate change conference in Glasgow in November (COP26). The other thing on people’s minds are trade disputes.
Philip Shaw, chief economist at Investec, says:
Those surveyed in the WEF’s Global Risks Report 2020 identified economic disputes, including trade tensions, as the number one risk to the global economy this year. Alongside this, “domestic political polarisation” and “extreme heat waves” were flagged as top threats.
We also expect world leaders to debate the 2020 events which have already unfolded and the repercussions of these, not least the US-Iranian conflict. Note that the WEF will get underway hot on the heels of the release of IMF’s World Economic Outlook update, providing the macroeconomic context for the discussions.
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