The more we see of Andrew Bailey, Governor of the Bank of England, the more we like Mark Carney, his predecessor. The World Economic Forum Annual Meeting is taking place in Davos, a pretty little town in the Swiss Alps, elevated at 1,560 metres - from there the dignatories can look down on the world and share their views about our failures.
The business leaders gathering in Davos amidst the slopes and smörgåsbord have expressed greater than cautious optimism about the state of the world's economy, with gas prices falling, inflation appearing to peak in the US, UK and much of Euroland and the dropping of most of China's Covid-interventions. Economists the world over may feel miffed about having been broadsided, previously predicting nothing but gloomy recession the world over in 2023, but the sunshine and slopes has clearly put delegates in a good mood.
One of those attending is Mark Carney, former Governor of the Bank of England, who had good things to say about the British economy yesterday (Wednesday 18 January). The Times reports that he heaped praise on Britain’s institutional strengths that had allowed the economy to withstand a series of shocks after the financial crisis, although he didn't actually name Kwasi Kwarteng by name. It is a little easier to make more comfortable predictions with gas prices (slightly) easing and inflation heading south but, today aside, where we have been able to see our breath in the NTI newsroom, we have enjoyed unseasonably warm weather and strong wind power generation in several countries, including the UK. Gas and Putin be damned.
Mr Carney's former employers have predicted that inflation will fall to 5 per cent at the end of the year, a forecast that could be amended after the unexpected drop in energy prices, as they don't have a great record on getting much right in the past three years. However Mr Carney said: “The UK’s structural response on financial services was leading, and with respect to sustainability, the UK has been among the leaders with the European Union," adding that rising global public debt levels were the result of governments failing to understand the importance of economic resilience in areas such as supply chains, financial services and climate policy.
Away from the swoosh of skis and clinking of apres-ski glasses, European stocks fell today amid renewed worries that the global economy could be heading for a hard landing. In London the FTSE 100 dropped 60.79 points, or 0.9 per cent, to 7,769.91 on the back of lacklustre US economic data. The FTSE 250 retreated 203.66 points, or 1 per cent, to 19,687.10, putting the index on course to end the week lower for the first time in four weeks.
Investors are very sensitive to US data, which last night showed a slowdown in consumer spending activity, while a couple of Federal Reserve officials flagged that more interest rate rises are to come.