COLUMN: Cautious optimism abounds at Davos

Nick Giles says growth is back on the agenda at the World Economic Forum - but leaders are still watching their step.

by Nick Giles
Last Updated: 30 Jan 2014

Two years ago Davos had a certain siege mentality. The Euro crisis was in full swing and a group of Occupy protestors had set up camp to throw verbal volleys at the CEOs, political leaders and celebrities who descend on Davos each January.

The world’s broadcasters had a field-day filming their modest camp and highlighting the disparity between the young people in their igloos and the moneyed elite holed up in the five star hotels up the hill.

This year the atmosphere couldn’t be more different. The optimism is palpable, with business, political leaders and 40 heads of state buoyed by the return to growth and the fact that the economic risks of two years ago have largely been averted.

The talk has been more confident and George Osborne has no doubt been pleased – despite today’s criticisms from Larry Summers – by the reaction of supportive CEOs encouraged by an improving economy in the UK. A stark contrast to last year, when he and the prime minister were harangued in the press for having an over-priced pizza during their visit here.

As I write, the Prime Minister is speaking on a panel with Bono – in one of the classic ‘only at Davos’ moments that characterise the week – and captured the mood here when he said: ‘I think overall things are moving in a pretty good direction’.

The PricewaterhouseCoopers annual CEO survey, published by MT this week, highlights this rising level of optimism. The proportion of CEOs who believe the economy will improve hit 44%, double that of a year ago, while only 7% believe things will get worse, in contrast to 28% the previous year.

The report says: ‘CEOs … seem to think – as Mark Carney, governor of the Bank of England, observed of the British economy in November 2013 – that, for the first time in a long time, you don’t need to be an optimist to see the glass as half-full.’

The world’s CEOs will also have been boosted by one of the other big studies launched at Davos this week: the Trust Barometer from global PR firm Edelman, which highlighted an increasing gulf between public perceptions of government and business.

As the FT reported earlier this week, only 39% of those surveyed among the world’s general public said they trusted government, down from 41% the previous year. Among the wealthier, better-educated people Edelman calls the ‘informed public’, the trust level fell to 44% – just shy of the low of 43% – from 48% last year.

Against this, faith in business remained steady: 58% of the informed public trusted business, the same as the previous year.

But despite the optimism, there are of course the portentous warnings. FT editor Lionel Barber tweeted this morning predicting an imminent backlash as consumers turn against the ‘Big Tech’ firms. Martin Wolf, the FT’s chief economics commentator, joined in the fun by guessing the likelihood of The Economist running a cover story this year referring to a Chinese economic crisis.

There is a lot of cautionary talk here this week about potential threats to stability and the challenge of rising inequality but despite the warnings the mood here is buoyant. The CEOs who have survived the past few years are upbeat.

The branded coasters at the PwC lounge where I’m writing this probably sum up the mood at Davos 2014 best: ‘Caution. Optimism ahead.’

- Nick Giles is co-founder of campaigning company Seven Hills

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