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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Davos 2017: Soros says UK in denial over Brexit, and May won't last – Day Three as it happened

Business magnate George Soros.
Business magnate George Soros. Photograph: Luke MacGregor/Reuters

Soros on Brexit

Here are some of the key quotes from George Soros, for those who missed his interview here in Davos tonight (delegates are now polishing off the pudding and wine in the Seehof Hotel)

In my opinion is is unlikely that prime minister May is actually going to remain in power. Already she has a very divided cabinet, a very small majority in parliament.And I think she will not last.

At the moment the people in the UK are in denial. The current economic situation is not as bad as was predicted, and they live in hope.But as the currency depreciates, and inflation will be the driving force, this will lead to declining living standards.

This is going to take some time, but when it does happen they’ll realise that they are earning less than before because wages won’t rise as fast as the cost of living.

The divorce is going to take a very long time. Its much harder to divorce than to get married, so I think the desire for rapprochement will develop, and in theory or maybe even in practice you could have a situation in 2019 or 2020 when Britain will leave the EU because it does have to take place, but they could leave on a Friday but join over the weekend and have the new arrangement in place in Monday morning.

Hmmmm, maybe George.

And on Europe, the billionaire who broke the Bank of England on Black Wednesday said:

“One has to recognize that the European Union has become too complicated and people are alienated. The anti-European parties are gathering force.”

And that’s all from Davos. Goodnight!! GW

Soros also took a swipe at Hungary’s government, which is threatening to crack down on the non-government agencies he funds.

He reads out a statement, saying that these threats against civil society are an affront to European values.

Before anyone mistakes George Soros for Cassandra, lets remember that he predicted a year ago that Europe would disintegrate.

He now says it won’t - because neither Vladimir Putin nor China want it to fail.

Updated

This session is being streamed live on Bloomberg TV, for anyone who hasn’t made it to the Seehof hotel in Davos.

Soros is taking questions from the room now -- and accepting them by email too, at sorosdavos2017@gmail.com

Onto China....and Soros says Beijing would have no choice but to retaliate if Donald Trump labelled it a currency manipulator.

It’s much harder to get divorced than to get married, Soros continues, explaining why the Brexit process will take a long time.

And he even suggests that Britain could quit the EU on a Friday, and rejoin on the Monday (!)

Soros: Theresa May won't last

George Soros now declares that it is unlikely that prime minister Theresa May will remain in power for long.

She has already got a divided cabinet and a small majority in parliament....I think she will not last, Soros tells his audience of Davos delegates.

The people in the UK are in denial, Soros continues. The current economic situation is not as bad as expected, so they live in hope, but as the currency depreciates, inflation will lead to a decline in living standards.

It will take time, but when it happens they will realise they are not as well off as before, Soros concludes.

If Europe breaks down, the consequences will be very dire, Soros concludes. And currently it is going in the wrong direction.

Q: How will Brexit play out?

I hope that both sides realise they must find some common ground.

A bitter divorce would hurt both sides -

And the divorce will be a long process. But when people realise they are going in the wrong direction, they will come together.

Soros cites the Guardian’s recent story that Michel Barnier was pushing for a special deal for the City.

Last year was a disaster for Europe, Soros continues, with the Brexit vote and the Italian election.

Europe has become too complicated, and people are alienated - the anti-European parties are gathering force and the future looks very bleak

Soros: Trump wants to be a dictator, but he won't be

Hello again from the Seehof hotel in Davos, where veteran billionaire investor/philantropist George Soros is giving his views on the state of the world.

On Donald Trump, Soros says he has described Trump as an imposter, a conman and a would-be dictator.

But he is confident that the constitution of the US and division of power will hold sway.

He would be a dictator if he could get away with it..but he won’t.

When Trump oversteps the mark, they will fight back, Soros predicts.

He believes that Trump was surprised to win the November election.....he was engaged in building his brand and his success in attracting crowds.

Soros says he’s convinced that Trump will fail - not because people want him to, but because the ideas that drive him are essentially contradictory.

For example, he has three chiefs of staff instead of one, and there will be tensions within his cabinet - meaning a lot of infighting in future.

And that means that the markets won’t maintain recent gains, Soros predicts:

Right now, uncertainty is at its peak, and uncertainty is the enemy of long-term investment.

Updated

It’s all winding down in the WEF conference centre now; but we’ll hoping to cover an interview/dinner with George Soros at around 8.30pm local time (7.30pm GMT)

European markets end lower

Mario Draghi’s dovish comments at the latest European Central Bank meeting sent the euro lower and also helped push European markets marginally into the red.

And with the dollar also weaker against the pound, the FTSE 100 also fell back - unsurprising given much of its recent gains have been due to the weakness of sterling boosting overseas earners. After Theresa May at Davos and Draghi at the ECB, investors are now awaiting Donald Trump’s inauguration on Friday with some nervousness. Connor Campbell, financial analyst at Spreadex, said:

With the [European] central bank predictably keeping rates on hold attention turned to Draghi’s statement and subsequent Q&A. The Italian struck a more dovish tone than was expected, dismissing the Eurozone’s recent CPI growth, arguing that ‘there are no signs yet of a convincing upward trend in underlying inflation’, while stating that the ECB stands ‘ready to increase [its] asset purchases in size and duration if necessary’.

This was exactly what the euro didn’t want to hear, causing the currency to shed 0.7% against both the dollar and the pound, leaving it at a 10 day low against the latter...

In the UK the pound’s gains, though less robust against the dollar than they were in the immediate aftermath of Theresa May’s Davos speech, continued to suppress the FTSE, the index dropping by just shy of half a percent as the day went on. The FTSE wasn’t helped by the sharp declines seen by its key commodity stocks, as well as the substantial 5% drop incurred by Royal Mail following its disappointing third quarter report this morning.

Ahead of Donald Trump’s inauguration tomorrow the Dow Jones was relatively subdued, trickling 0.2% lower after the bell. As for the day’s data, the Philly Fed manufacturing index smashed expectations at 23.6, the highest reading in 2 and a half years, while at 234,000 jobless claims once again neared a 43 year low.

The final scores showed:

  • The FTSE 100 finished down 0.54% at 7208.44
  • Germany’s Dax dipped 0.02% to 11,596.89
  • France’s Cac closed 0.25% lower at 4841.14

On Wall Street, the Dow Jones Industrial Average is currently down 51 points or 0.16%.

As for the pound, it is up 0.45% against the dollar at $1.2311 and up 0.52% against the euro at €1.1590.

Updated

Here’s part of the transcript of Theresa May’s interview with Bloomberg TV.

On bank jobs leaving London:

Well I’ve had positive meetings with bank CEOs here and also with CEOs from tech companies and others and the message I’ve brought here to Davos is that Britain outside of the European Union, we want to build a truly global Britain. A Britain that is an advocate for free trade, for free markets around the world and a Britain that is ensuring that we are taking those opportunities. I want to negotiate a good free trade agreement with the European Union when we come out, I want the best possible access for trading with and operating within the European single market, for both goods and services. I value financial services in the City of London and I want to ensure that we can keep financial services in the City of London and that global Britain, I believe will do just that.

On the customs union:

Well a customs union of course is a separate issue from the free trade agreement. And what I want to see is as frictionless a border as possible. I do want to be able, for the UK to be able, to negotiate free trade deals around the rest of the world. We already have countries, I mean earlier today Australia has re-iterated its commitment to a free trade deal with the United Kingdom. We have countries around the world who want to talk to us about this, we’ve already started talking to many about free trade agreements. So we want to look globally, not just to the EU but out around the whole world: a truly global Britain, bringing prosperity and jobs to the UK.

On globalisation:

I think what’s important is that those of us who believe, as I do, in free trade, in free markets, in globalisation, it’s important that we recognise that for some people that this has left them, has passed them by. That they’re just getting by rather than getting on and so it is important and I’ve said this right from the very beginning of my time as prime minister, that I want a country and an economy that works for everyone. One of the things we’ll be doing in the UK is introducing a modern industrial strategy that’s about the economy of the future, it’s about ensuring that business can grow and is encouraged to grow in the UK, but it’s also about ensuring that the benefits of prosperity are available across the whole country, we see that economic growth and prosperity for everyone.

On the pound’s weakness:

Well, we’ve seen different movements in the pound over the last six months, but what we’ve also seen, through the other economic data that we’ve seen, is the strength of the UK economy. You know, the IMF has made the point, we were last year the fastest growing major economy – only this week we had good figures which showed unemployment coming down once again. So we see a fundamental strength in the UK economy. I believe that’s a good strength, I believe it’s an economy that people want to invest in, and in fact, since the Brexit vote, we’ve seen major companies like Nissan, like Google, Facebook actually making investments. SoftBank taking over Arm in the UK, making very significant investments here in the United Kingdom.

And on technology and jobs:

Well I think it’s interesting if you look at technology, and of course technology is changing the workplace, but also technology creates jobs, and often creates jobs in areas that are unexpected. So it isn’t quite a zero-sum game in that sense. But I think what people feel very often is that sometimes they see people playing by – appearing to play by a different set of rules. Sometimes there are some companies, the behaviour of which, or perhaps individuals within them, suggests to the public that actually there’s one set of rules for those people and another set for ordinary hardworking families. I want to show that business is responsible, that people are playing by the same rules, and that together we can grow, that we can develop that prosperity that will be good for everyone.

And here is Bloomberg’s write-up of the interview.

Updated

Theresa May also returned to the theme of globalisation, and commented on how technology was changing the workplace.

Theresa May has been speaking on TV at Davos, and has told the BBC that she has had positive discussions with banks about the benefits of the City of London, and how to build on that for the future.

This comment comes of course as banks continue to suggest they will move employees out of London as a consequence of the UK leaving the EU.

Asked about the weakness in sterling on Bloomberg TV, she did not want to get into a discussion about the value of the pound but pointed to economic data showing the fundamental strength of the UK economy.

She also repeated that the UK had already begun discussions with other countries about free trade deals.

Updated

Our economics editor Larry Elliott reckons that European leaders won’t be scared by Philip Hammond’s threat to slash taxes and regulation if Britain doesn’t get a good Brexit deal.

May and Hammond had two aims in Davos. The first was to convince UK business leaders they had a plan, an objective largely achieved even among those that think tough times lie ahead. The second was to smooth things over with businesses and politicians in the rest of Europe, which has been far less successful. May and Hammond seem oblivious to the current level of hostility towards the UK.

Nor is the May-Hammond “iron fist in the velvet glove” routine likely to make the rest of Europe soften its hard line in the negotiations. Why? Because there is an obvious inconsistency in the prime minister calling for a bigger role for the state to ensure globalisation works for those who voted for Brexit; and the chancellor saying that if the worst came to the worst Britain could slash taxes, have a bonfire of regulations and be western Europe’s Hong Kong. The EU 27 will see scorched earth as an empty threat. Which it is.

Here’s his full analysis:

UN chief: Youth unemployment is worst problem we face

António Guterres, the new head of the United Nations, has singled out youth unemployment as a major threat to global security.

In a keynote speech, Guterres says that:

The scourge of youth unemployment is probably the worst problem we are facing today, with consequences for the wellbeing of the people involved, societies, and global security too.

Young unemployment people in several parts of the world are the largest area of recruitment for terrorist groups.

Guterres also warns that we live in a “dangerous world” today; countries must bolster their efforts to deliver peace.

Euro under pressure after Mario Draghi plays down inflation pick-up

The euro has weakened on Mario Draghi’s comments at the ECB’s first press conference of 2017, with investors interpreting his stance as largely dovish.

After announcing its decision to leave key interest rates and the quantitative easing (QE) programme unchanged at its 1,000th board meeting, the ECB president highlighted downside risks to the eurozone economy from “global uncertainty” and noted a lack of underlying upward pressure on inflation. Much of the recent rise in inflation, he says, is down to energy price movements and he also pointed out nominal wages growth remains subdued. There is more of that in his opening statement.

Draghi appeared keen to send the message that the ECB remains ready to do more to shore up the eurozone’s economic recovery as necessary. Draghi said there was no discussion of tapering - the process of winding down QE. In the wake of criticism from German politicians over how low interest rates were hurting those with savings, he also called on people to be patient with the ECB. He patiently fielded several questions on German low rate angst.

To the likely disappointment of reporters at the news conference, the ECB president dodged a question on whether Donald Trump could make life more difficult for those charged with safeguarding the euro after the president elect said in an interview that it would be a struggle keeping the euro together.

A careful Draghi said:

I just won’t make any comment on that... I would rather comment on policies and policy actions than just statements.”

His apparently relaxed stance on inflation left the euro down 0.3% against the US dollar at $1.0600 by the end of the news conference. Against the pound it is down 0.6% on the day to 86.19 pence. Europe’s Stoxx 600 share index turned positive after the apparent promise of ultra-low interest rates for a very long time to come.

Commenting on the tone of the press conference, David Lamb sums up the likely reaction of German politicians:

In Berlin, Mario Draghi’s unwavering dovishness will go down about as well as Donald Trump’s hints of tariffs on German cars... With the money-printing set to continue until further notice, inflationary pressures will return and the euro has taken an immediate hit.

Oxfam worried by Trump and May's tax talk

Oxfam’s Winnie Byanyima says the”race to the bottom on corporate tax” needs to be addressed.

It’s worrying now. We’ve seen the promise from president-elect Trump to cut corporate tax.

We’ve heard Theresa May threatening to make Britain a little island with low tax rates on the shores of Europe.

These are steps in the wrong direction. This year we need to see progress on this corporate tax competition.

This isn’t just an issue of legal compliance, Byanyima continues.

The local corner shop where I buy bread probably pays a higher tax rate than Apple.

We want to see big companies take this as more than a legal compliance, and see it as a moral issue to society - to provide their fair share to fund heath, education, to create jobs for young people, she adds.

Updated

.

Switzerland is now ‘fighting the good fight’ against tax avoidance today, says the OECD’s Angel Gurria.

Some background: the new global standard on Automatic Exchange of Information (AEOI) come into effect in September 2017, when around 50 jurisdictions will work towards having their first information exchanges.

Angel Gurria insists that real progress has been made in fighting tax avoidance and evasion.

Back in 2008, there were 30 agreements to share tax information. Today there are 3,500, he says.

The promise is enormous, and the potential is very great and it could really help these developing countries.

Oxfam’s Winnie Byanyima is adamant that the current plans don’t go far enough. Simply hiring more tax collectors doesn’t address the use of tax loopholes, or the wider issue of low corporate tax rates.

The transparency is good, but it doesn’t go far enough.

It doesn’t have public country-by-country recording -- if people don’t know what firms are doing, you’re not going to get the secrecy out and tax them fairly.

Panama’s vice-president points the finger at big companies for forcing tax breaks out of developing countries.

Isabel de Saint Malo de Alvarado says some multinationals go to 3rd World companies and “insist on negotiating tax breaks that local companies don’t have”, in return for siting their operations there.

Updated

Poland’s deputy prime minister, Mateusz Morawiecki, reckons the global tax avoidance problem is probably even bigger than that $240bn figure.

Morawiecki says that the three countries who make the most foreign direct investment into the European Union are the United States, then Switzerland, then Bermuda.

And the list of FDI payments to countries from the EU is exactly the same (ie, the most goes to the US, then Switzerland then Bermuda).

If this is not huge, global tax evasion, I don’t know what is.

Updated

Oxfam's Byanyima: Tax avoidance is a human rights issue

Tax avoidance is a human rights issue, declares Winnie Byanyima, executive director at Oxfam International.

She tells her audience at WEF that Kenya is losing $1.1bn every year through tax incentives and tax exceptions.

That’s almost double its health budget; in a country where 1 in 40 children die at childbirth.

This is really a human rights issue.

Byanyima is much less optimist than the OECD’s Angel Gurria - she agrees there is progress, but we have a long way to go.

She brings a home truth to Davos too:

First of all, the developing countries are not at the table, while a notorious tax haven like Switzerland had a place at the table.

There is a harmful race to the bottom with countries offering lower tax rates to attract companies (something Philip Hammond has been hinting at), Byanyima adds, saying pointedly:

If you can’t dodge taxes, you pay the government to lower the tax rate.

Companies need to be forced to provide proper country-by-country reporting of their tax bills, she concludes, to get proper transparency:

Yes we are moving, but not fast enough or broadly enough.

Panama VP: Panama Papers made us run faster

Panama’s vice-president says her government understands the importance of taxes, both to fund Panama’s spending and to help other countries fight evasion.

According to Isabel de Saint Malo de Alvarado, Panama had been taking action since her government took office 2 and a half-years ago.

Before the Panama Papers, President Varela had announced our commitment to automatic information sharing, to the United Nations.

And then this leak came, which pointed out a global problem...

A global problem which Panama needs to participate in the solution, and the rest of the world needs to participate in the solution.

It made us run faster, we were already running.

I can say today there is not one issue pending in Panama’s steps to comply with international standards on information sharing, she adds.

Updated

The panel begins by hearing that countries lose $240bn of tax revenues per year through tax avoidance by companies, according to the OECD

100 countries have signed to an information-sharing deal. Is it making a difference?

Absolutely, says the OECD’s Angel Gurria. And that includes Panama, which has signed up too.

My message to the Panamanian Congress is - yes, pass the law.

Complying with the tax system doesn’t mean changing it, it means enforcing it, Gurria continues.

And next September, countries will start automatic information sharing - companies who haven’t reported information correctly will be caught out.

Watch the Panama Papers session here

Davos panel on Panama Papers

Nine months ago the Guardian exposed how Panamanian law firm Mossack Fonseca was helping some of the world’s richest people, and its largest companies, avoid tax.

Those revelations helped to drive the issue of aggressive tax avoidance high up the political agenda.

Now, a heavyweight group at Davos are discussing how to get multinational companies to pay a fair share -- an issue Theresa May also highlighted in her speech.

On the panel:

  • Angel Gurría: Secretary-General, Organisation for Economic Co-operation and Development
  • Winnie Byanyima: Executive Director, Oxfam International
  • Valdis Dombrovskis: Vice-President and Commissioner, Euro and Socia..., European Commission
  • Isabel de Saint Malo de Alvarado: Vice-President of Panama
  • Mateusz Morawiecki: Deputy Prime Minister of Poland

Here’s some background reading while we wait for it to start:

Hammond: Fog of Brexit is starting to clear

Chancellor Philip Hammond turned a bit lyrical when he spoke to business leaders today, telling them that the “fog of Brexit” was starting to lift.

“We are not going to get rid of it overnight but I hope gradually it will start to lift. A few things are becoming clearer through the mist.”

The chancellor also stressed that the Government would do whatever necessary to ensure Britain remained competitive in the event that the rest of the EU cuts up rough in the divorce negotiations for Brexit.

Hammond said:

If somehow despite out best efforts political retribution were to triumph over economic logic, and we don’t get a fair deal....we will have to do whatever was necessary to ensure the continued competitiveness in those circumstances.

“That’s not a threat. It is a statement of the blindingly obvious.”

He returned to the theme in the Q&A session after his speech, saying that a free trade deal with the EU was not the only way for Britain to remain competitive. “We have reinvented ourselves before and we will do so again if we have to.”

Alibaba Group Founder and Executive Chairman, China’s Jack Ma (L) poses with International Olympic Comittee (IOC) president Thomas Bach
Alibaba Group Founder and Executive Chairman, China’s Jack Ma (L) poses with International Olympic Comittee (IOC) president Thomas Bach Photograph: Fabrice Coffrini/AFP/Getty Images

Elsewhere in Davos, Chinese billionaire Jack Ma has taken another stride onto the world stage by announcing a major sponsorship deal with the Olympics.

Ma’s Alibaba has signed up until 2028, and will provide cloud computing services, and help build a new e-commerce platform to flog Olympic branded products to the masses.

They’ll also help develop and customise the Olympic Channel, a web site, for a Chinese audience.

No pricing details, I’m afraid.

Chancellor Philip Hammond has been praising the City, at a lunch with top UK CEOs and journalists.

Hammond warns that ‘fragmenting the City’ isn’t in anyone’s interests, but he has also repeated his warning that the UK could lower taxes and regulations if it can’t get a good Brexit deal:

Hammond also touches on the customs union issue that is worrying Sir Angus Deaton:

ECB leaves rates and QE unchanged for now

Away from Davos, the European Central Bank has confirmed it is leaving its key interest rates unchanged and not tinkering any more for now with its bond-buying programme, AKA quantitative easing (QE).

Amid signs that inflation and growth are picking up, the Frankfurt-based central bank for the eurozone also stuck to its previous guidance that it stood ready to act should things take a turn for the worse.

The full statement is here, but here’s a flavour:

The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases...

If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the [asset purchase] programme in terms of size and/or duration.”

We will get a clearer sense of how ECB policymakers see things when president Mario Draghi hosts a news conference at 13.30GMT.

The ECB surprised markets in December by reducing the amount of stimulus it expects to provide each month. The value of the bonds bought by the ECB per month under the QE programme will drop to €60bn (£51bn) from April next year, from €80bn currently. But whatever you do, don’t try and tell Mario Draghi that’s tapering.

Labour leader Jeremy Corbyn (who isn’t at Davos, alas) has responded to May’s speech:

“Today in Davos the Prime Minister talked about making globalisation work for all. But actions speak louder than words.

“At every opportunity, the Conservatives have given handouts to the wealthiest and cut taxes for big business - while refusing to provide vital funds for the NHS, cutting social care and ditching rights at work.

“Theresa May’s vision for Brexit is now clear: a bargain basement Britain on the shores of Europe based on low pay and deregulation.

“This week we heard the Prime Minister threaten to turn Britain into a tax haven, slashing corporate taxes and workers’ rights in an all-out race to the bottom.

“People won’t be taken in by warm words. This Conservative Government is backed to the hilt by wealthy elites, lines the pockets of its friends and resists all practical steps to make a fairer Britain work for all”.

Nobel prize winner: May came across as the anti-Thatcher

Nobel prize winner Sir Angus Deaton tells me that May’s speech missed out some key issues.

For starters, there was no mention of Scotland - Deaton’s home country. He wants to be a member of the European Union, and a member of the United Kingdom - and now that doesn’t seem possible.

And on trade, Deaton says:

I was also surprised she talked about free trade all the time, and she didn’t talk about the customs union.

That’s a big deal. Free trade and custom unions are not the same thing, and I think that will hurt Britain.

So I haven’t changed my expectation that in the long run Britain would be a lot better off in the EU than out.

This was the first time that Deaton has watched May speak in the flesh, and he was reminded of an earlier Conservative leader.

The immediate analogy when you see her for the first time is, this looks like Mrs Thatcher. But when you listen to her, she’s sort of the anti-Thatcher in some sense. Mrs Thatcher used to say there is no society, while she was talking about society.

Mrs Thatcher would have not been very keen on taking us out of the EU.

So it really is very different from Mrs Thatcher.

Lib Dems: May has a brass neck over tax

Theresa May’s stern rebuke to businesses who are not paying a fair share of tax sounded good in the cavernous WEF hall.

However, we should remember that Britain has been lowering its own corporation tax rate for years to attract firms to base here.

And just last week, chancellor Philip Hammond threatened that the UK might abandon European-style regulations and taxes after Brexit, if the economy struggles.

The leader of Britain’s opposition Liberal Democrat party, Tim Farron, says:

“The Prime Minister certainly has a brass neck. She goes to Davos to lecture businesses about looking after the little guy yet she threatens to turn the UK into a Europe’s biggest tax haven.

“This shows, yet again, that this Tory government are treating our country like UK plc. They are running our economy like it is a closing down sale. But higher prices and more expensive fuel mean families will feel the brunt of this government’s bad economic policies.”

Markets muted during May's speech but pound holds on to gains

Theresa May’s speech may have been a hot ticket at Davos and generally well received by those present, but the market reaction back home was far more muted than the wild gyrations seen during Tuesday’s Brexit performance. For a start the speech was shorter - only half an hour compared to around 50 minutes - and revealed no new details of Brexit strategy.

The pound was already up 0.47% at $1.2314 against the dollar at the start of the speech, hit a peak of $1.2332 and then as she finished, drifted back to where it started but still showing a positive move for the day.

Against the euro, the pound had edged up 0.19% at the start, and ended up 0.16% at €1.1548. The FTSE 100, down due to the rise in the pound dampening enthusiasm for overseas earners, dipped lower during the speech, from 7216 to 7208, down 0.55% on the day so far. Connor Campbell, financial analyst at Spreadex, said:

The pound seemed to react well to Theresa May’s Davos speech this Thursday, with the first ECB meeting of 2017 still to come... It was the tone that mattered more than the content, with May framing the Brexit vote as, however incredulously, a defence of globalisation and free trade. This did, however, lead the FTSE more than 40 points lower, the UK index hampered not only by the pound’s rebound but also the losses in its commodity and banking sectors, as well as the 6% post-third quarter update decline seen by Royal Mail.

Sadiq Khan: May must listen to businesses

Britain’s Prime Minister Theresa May leaves the stage after giving her speech today.
Britain’s Prime Minister Theresa May leaves the stage after giving her speech today. Photograph: Laurent Gillieron/EPA

London mayor Sadiq Khan tells us that it’s “brilliant” that Theresa May is in Davos today.

But he also warns that her Brexit speech on Tuesday, in which she confirmed Britain would leave the Single Market, has spooked some in the City.

On a whistle-stop trip around Davos, Khan tells us that firms who leave London are unlikely to permanently relocate to Europe.

I think the fact she’s got a plan is welcome. I think the fact she’s here is brilliant

But I think she needs to be listening to what our friends, chief executives, innovators, entrepreneurs, political leaders are saying, which is that no-one is bringing us bad will.

There’s no bad feeling here.

But there’s got to be a recognition that so-called hard Brexit benefits no-one, in relation to London, the UK, or Europe.

Businesses that leave London aren’t going to Paris, Brussels, Madrid, Frankfurt, they’re going to New York, Singapore, and Hong Kong.

Khan says he fully accepts the referendum result, but argues that “no-one voted to make us poorer”. So the government must make it a priority to get “privileged access to the single market” so London can still attract talent.

The good news is that over the last six months Google, Apple, Facebook and Snapchat have expanded their presence in London.

But the bad news is that, as a consequence of the speech on Tuesday we have some banks and investment firms expressing unease about their future.

Europe’s trade commissioner, Cecilia Malmström, has also given May a thumbs-up for her comments on making globalisation work.

Speaking to AFP newswires here, she said:

It was a good speech. She captured lots of the concerns about a responsible globalisation that we all talk about.

Katherine Garrett-Cox, the former chief executive of Alliance Trust, tells me that Theresa May gave Davos what it wanted.

I think she did a very good job of setting out a clear plan in terms of what Britain intends to do, what Britain intends to stand for, and I think that’s really what people wanted to hear.

There’s obviously been a lot of criticism over the past six months over where does this start and where does it go. I think we heard very clearly that that’s the plan, and now we’ve got to get on and do it.

Q: Can we do it, though, at the same time as negotiating Brexit?

We’ve all heard that the divorce, as people have called it, is going to be complicated and complex. But I think we all have to believe that we can do it, so I’m optimistic.

Q: What’s your biggest concern now with Brexit?

My biggest concern is that businesses step up and embrace the opportunity rather than constantly looking for the downside.

I’ve grabbed a word with Dr Paul Sheard, the chief global economist of Standard & Poors, outside the conference room.

He says May gave a “very good” speech.

Theresa May was laying down a stake and saying - Britain will be the lead supporting voice for globalisation in the world.

A lot of people have seen Brexit as anti-globalisation, a return to nationalism. She’s pivoting to saying ‘no, this is about Britain being very global’.

We now have two global leaders, President Xi Jinping and Theresa May, both making a pitch in support of globalisation, Sheard adds.

Snap verdict: May pitches for top global role

Two days ago, Chinese president Xi Jinping wowed Davos with a speech defending globalisation, at a time when Donald Trump has put free trade under threat.

And now Theresa May has declared that Britain is determined to become a more powerful player after Brexit, despite the difficult negotiations ahead.

1) She seemed to give Davos what it wanted to hear, saying that the UK will be a “global Britain” after leaving the EU

I want the UK to emerge from this period of change as a truly Global Britain – the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too; a country that gets out into the world to build relationships with old friends and new allies alike.

2) She threw her weight behind the growing pressure to fix globalisation to address the populist surge in politics; a major issue this year.

May, though, took an almost moral tone, speaking about how the responsibilities we have to one another have been forgotten. This was the key line:

But just as we need to act to address the deeply felt sense of economic inequality that has emerged in recent years, so we also need to recognise the way in which a more global and individualistic world can sometimes loosen the ties that bind our society together, leaving some people feeling locked out and left behind.

3) She was interventionist, highlighting her industrial strategy and saying:

For government, it means not just stepping back and – as the prevailing orthodoxy in many countries has argued for so many years – not just getting out of the way.

Not just leaving businesses to get on with the job and assuming that problems will just fix themselves. It means stepping up to a new, active role that backs businesses and ensures more people in all corners of the country share in the benefits of its success.

4) And she criticised business leaders too, especially those multinationals who can seem to play by different rules.

Theresa May ended her speech with a call on global leaders and business chiefs to work together to make globalisation work for everyone.

As we build a new, bold, confident Global Britain and shape a new era of globalisation that genuinely works for all

As we harness the forces of globalisation so that the system works for everyone, and so maintain public support for that system for generations to come.

I want that to be the legacy of our time.

To use this moment to provide responsive, responsible leadership that will bring the benefits of free trade to every corner of the world; that will lift millions more out of poverty and towards prosperity; and that will deliver security, prosperity and belonging for all of our people.

May: Centre-ground politics can respond to people's concerns

May returns to the downsides of globalisation - and the damage it has done to societies.

Too often today, the obligations we have to each other have been forgotten, she says.

We need to recognise how a more global and individualistic world can loosen the ties that bind us together.

And May stakes her flag firmly, declaring:

I am determined that centre-ground mainstream politics can respond to the concerns people have today.

That means standing up for free trade and globalisation, but also ensuring it works for everyone.

And she quotes Edmund Burke, who wrote:

A state without the means for some change is without the means for its own conservation.

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May insists that governments have an obligation to help those who need help the most.

If you’re just getting by, you don’t want a government that gets out of the way - you want one that will help you.

Government and business need to do even more to make the case for globalisation, May continues.

She cites her new industrial strategy -- a term that had fallen into disrepute in recent years.

But Britain is going to create the conditions where winners can grow and thrive, not about ‘picking winners’.

We must step up and take control to make sure that free trade and globalisation works for everyone.

May: Firms must pay fair share of tax

May now addresses the UK business leaders in the audience - saying they must do more to help the public.

She cites the importance of everyone paying a fair share of tax.

In the UK, trust with business runs at just 35% among the lowest-income groups.

Companies must putting aside short-term considerations, and investing in people and communities for the long term.

There is a feeling that some companies, especially multinationals, are playing by a different set of rules to everyone else, May declares.

It is essential for business to show leadership - to show that in this globalised world, everyone is playing by the same rules.

On globalisation, May reiterates that some people are being left behind by economic changes - they are getting by but not getting on.

On slavery, May urges her audience to help tackle this abhorent problem; she has convened a top-level panel at Davos today to seek solutions.

May reminds the audience of the dark days in the first half of the 20th century.

We must uphold the institutions that help the world to work together, and guarantee global security.

May also cites Britain’s multicultural heritage.

May: Britain will take lead on global stage

May is outlining her vision of making Britain a truly global country.

We are going to be a confident country that is in control of its destiny once again.

A country in charge of its own destiny is in a better position to take the lead in improving the world, she continues.

She cites the fact that some of Britain’s most famous car brands, like Jaguar Land Rover, are owned by India’s Tata.

Brexit was a vote to take control, and make decisions ourselves, May continues.

Britain’s history and culture is profoundly international, she says. We have always looked beyond Europe to the wider world.

We are, by instinct, a great global trading nation.

And we want to strike trade deals with old friends and new allies around the world.

She welcomes the fact that preliminary talks are underway with several countries including Australia, while China and the Gulf States have expressed interest in making deals with us.

May: Brexit was about building global

Britain faces a time of momentous change, and tough negotiations, May says, following the Brexit vote.

But we must believe that it will lead to a better future

British people chose to build a truly global country, May says.

And we face the future with confidence.

Theresa May speech begins

May’s on the stage now.

This is an organisation that is committed to improving the state of the world.

Those of us who meet here are optimists, who believe in the power of public and private collaboration to make the world tomorrow better than today.

Free trade, partnership and globalisation.

But outside this hall, those forces for good which we take for granted are being called into question.

Forces that have had such a positive impact, lifting millions out of poverty, broken down barriers and raised living standards, are now being undermined.

As we meet here, across Europe parties of the far left and far right are trying to profit from a keenly felt sense, especially among those on modest incomes, that these forces are not working for them.

These people feel that mainstream political and business leaders have failed to appreciate their legitimate concerns for too long, May says.

But she will lay out an agenda for how mainstream politics can address this.


Davos’s founder Klaus Schwab has taken the stage, to introduce Theresa May.

Schwab says he was born before world war 2 broke out - for him, Europe was a big dream of never having war again, and feeling united.

He says he’s very pleased to hear Theresa May say that the UK will not leave Europe, but will have a very amicable divorce.

Hammond and Khan are now chatting together, as we wait for the PM...

Updated

Chancellor Philip Hammond just marched into the hall, not far behind Sadiq Khan.

Philip Hammond (centre)

Watch Theresa May's speech live here

Even the global elite have to queue sometimes. There’s a massive line snaking around the conference now, as delegates try to bag a decent seat to watch Theresa May in 25 minutes.

There’s a flurry of activity as some of the global elite head into a private meeting in the heart of the WEF conference centre.

It looks like an IGWEL - or Informal Gathering of World Economic Leaders in the Davos jargon.

I’ve spied IMF chief Christine Lagarde, Bank of England governor Mark Carney and HSBC chairman Douglas Flint arriving (you can see Lagarde here)

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One insider says they’ll be discussing sustainable development; hopefully they’ll still catch Theresa May’s speech too.

Updated

Sadiq Khan: Other countries could vote to leave the EU

London mayor Sadiq Khan is also in Davos today.

He’s been meeting with business leaders, and arguing for Britain to get privileged access to the single market.

He’s just giving an interview to the BBC now, saying that his message to EU leaders is not to assume the Brexit vote was a one-off.

Unless you address the concerns around globalisation, unless you address these issues, if there’s a vote in your country whether to stay or leave the EU don’t be surprised if your voters decide to leave the EU.

The agenda: Theresa May to address WEF

Good morning from Davos, and day three of the World Economic Forum’s annual meeting.

Theresa May swept into the Belvédère hotel in the centre of this ski resort last night, on the latest stage in her push for Brexit.

The UK PM is the hottest act in town today; at 10.15am local time (9.15am GMT) she will deliver a special address to an audience of fellow world leaders, business chiefs and economists.

The speech gets top billing:

Britain after Brexit. British Prime Minister Theresa May will spell out the economic implications of leaving the European Union

May is expected to talk about those who have not prospered under globalisation; linking the Brexit vote into a broader theme that has dominated talk at Davos this week already.

One Downing Street source told Sky News overnight that:

“The PM is reflecting themes she’s spoken about before - that change has to come in order to benefit who have been left behind.”

May’s likely to use the speech to pitch for more global trade, saying Britain remains open to business despite voting to leave the EU.

The speech could also include a hard-hitting section on modern slavery; a priority for May since her days as Britain’s Home Secretary.

May is also meeting bank chiefs in Davos, such as Wall Street bosses who are wondering whether to start moving jobs and operations out of the City in anticipation of the UK leaving the single market.

Bloomberg: May Meets Wall Streeters in Davos as Banks Plan Brexit Exodus

It could be a tricky Davos debut for May; the Guardian reports this morning that European leaders are presenting a united front ahead of the EU exit talks.

Jean-Claude Juncker, the president of the EU commission, led the way, predicted that negotiating Brexit will be “very, very, very difficult”

But May has allies here too; chancellor Philip Hammond will meet with a clutch of UK business chiefs at a lunch later.

We’ve also spied Liam Fox; the Secretary of international trade told us last night that he’s here to make the the case for free trade, and make sure that global markets don’t “silt up”.

We’ll be tracking all the action from Davos through the day...

Updated

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