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Davos Spells Promise For British Economy

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Global chief executive officers are increasingly attracted to investing in Britain, according to developments at the World Economic Forum in Davos this week.

In news that will be welcomed by proponents of the United Kingdom’s departure from the European Union, a study by the International Monetary Fund unveiled at the conference predicted that the United Kingdom’s economy will grow faster than the eurozone for the next twenty-four months, assuming that there is an orderly Brexit.

The United States and Canada are the only G7 economies whose growth will surpass Britain’s economy over the next two years, with the eurozone predicted to grow by 1.3 per cent in 2020 and 1.4 in 2021.  The news offers the UK some consolation after the IMF cut its forecasts for global economic growth this year from 3.4 per cent to 3.3 per cent on Monday, casting a shadow over the opening of the event in Davos.

PricewaterhouseCoopers global CEO survey, published on Tuesday, showed that chief executives are increasingly attracted to investing in Britain, with Britain returning to joint-fourth place in the consultancy’s rankings of most important territories for growth in economy, behind the United States, China and Germany, a place it has not held since 2015.  Australia also moved up the rankings as Chinese CEOs shift away from US investment.

However, the survey painted a gloomy picture of the economic outlook generally, with CEOs expressing record levels of pessimism.  For the first time in the history of the survey, more than half of the almost 1,600 CEOs polled believed the rate of global GDP growth will decline over the next twelve months, and only 27 per cent of chief executives were “very confident” in the prospects for revenue growth in 2020, a level not seen since 2009.

PricewaterhouseCoopers chairman Bob Moritz told the American broadcaster CNBC:

“When you look at the UK specifically . . . you have got a little bit more certainty.”

The IMF praised the fast actions of central banks to cut interest rates, saying global growth would have been 0.5 percentage points less had the Federal Reserve, European Central Bank and others not cut interest rates in 2019.

Kristalina Georgieva, the managing director of the IMF, called the 71 interest rate cuts by 49 central banks last year “the most synchronised monetary easing since the global financial crisis” and said that without them “we would have technically been talking about recession”.

24th January 2020.