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Davos elite declare war on cost of living crisis

How to solve the cost of living crisis was the topic on the lips of the world’s business leaders yesterday as the annual gathering of the global elite began in Davos.

The bosses, politicians and luminaries gathering in the Swiss ski town may not yet feel the pinch in their own pockets: You could still hear the drone of helicopters in the Swiss resort as the World Economic Forum conference began. (WEF).

But they were eager to tackle the rising price issue that poses a threat to their businesses and citizens.

Battle against inflation: Business leaders gathered in the Swiss ski town of Davos were eager to tackle the issue of rising prices that pose a threat to their businesses and citizens.

Battle against inflation: Business leaders gathered in the Swiss ski town of Davos were eager to tackle the issue of rising prices that pose a threat to their businesses and citizens.

The WEF is holding its annual meeting at a turbulent time.

Not only will the conference be held four months later than usual, with well-dressed delegates wiping their brows in the spring dampness rather than stepping into the winter snow, but there is a confluence of factors that threaten to bring the world into a recession.

In a somber update, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said white-hot inflation, an energy crisis and rising protectionism threatened the global economy.

Even since April, when the IMF lowered its growth forecasts for more than 100 countries, including the UK, Georgieva said the “horizon has darkened” further.

“The consequences of the conflict in Ukraine are growing faster and faster,” he said. “We see 2022 as a difficult year.”

Asked if he expected a recession for the world’s major economies, he said: ‘No, not at the moment. But that doesn’t mean it’s out of the question.

Rising food costs, he added, would be particularly damaging.

But Citigroup boss Jane Fraser, who sounded the alarm on inflation as early as last year, was more black and white.

When asked if she was almost sure there would be a recession in Europe, she simply said: ‘Yes’.

He added: “Europe is right in the middle of the supply chain storms, the energy crisis and obviously just proximity to some of the atrocities that are happening in Ukraine.”

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Late arrival: ECB President Christine Lagarde told Davos delegates that Europe will follow the UK and US with interest rate hikes.

Back in Frankfurt, the European Central Bank (ECB) finally began to show the extent of its own concern. In a blog post that analysts called “remarkably explicit,” ECB President Christine Lagarde suggested interest rates in the European Union would be raised in July from their current level of minus 0.5 percent.

The ECB has so far avoided raising interest rates, unlike the UK and US, out of fear it could stall the Covid recovery.

While higher interest rates theoretically dampen rising prices, encouraging households and businesses to keep their money rather than spend it, it also hampers activity.

But soaring levels of inflation, or rising costs of living, have pushed officials to take action. Explaining that the ECB would start ending its massive money-printing program from “very early in the third quarter,” he added: “This would allow us a rate lift-off at our July meeting, in line with our forward guidance.” “.

Throughout several of the panel sessions at the WEF, the brains of the business world urged world leaders to continue cooperating.

Saadia Zahidi, managing director of the forum, warned that the world is on “the cusp of a vicious circle”.

IMF chief Kristalina Georgieva (pictured) said white-hot inflation, an energy crisis and rising protectionism threatened the world economy.

IMF chief Kristalina Georgieva (pictured) said white-hot inflation, an energy crisis and rising protectionism threatened the world economy.

He added: ‘Leaders face difficult decisions and internal trade-offs when it comes to debt, inflation and investment.

“However, business and government leaders must also recognize the absolute necessity of global cooperation to prevent economic misery and hunger for millions of people around the world.”

The Davos elite were not entirely gloomy before departing for their evening champagne receptions.

David Rubenstein, co-founder and co-chairman of US private equity giant Carlyle Group, repeatedly replaced the word recession with “banana,” echoing a former adviser to President Carter who avoided the “R word” in an effort not to alarm. the electorate

There probably wouldn’t be a ‘banana’, he argued, saying both the Covid crash and the 2008 financial crisis had been more severe. If there was, she said, it would probably be minor.

Davos delegates, who will be at the conference until it closes on Thursday, with no chance to ski to lift spirits as in previous years, can expect the optimism to continue.

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