Optimism soars among Davos leaders - but King adds to UK gloom

On the opening day of Davos, a survey finds that CEO optimism is now almost back at pre-crash levels. But maybe not for the Brits...

by James Taylor
Last Updated: 19 Aug 2013
The great and the good of World plc are enjoying the Davos snow for the rest of this week, and it seems to have put them in good spirits: a survey by PwC found that 48% of CEOs were feeling 'very confident' about growth in the coming year. That's up from 31% last year, and represents a level of optimism we haven't seen since Davos 2007, before the financial crash. But given yesterday's horrible GDP figure, and Mervyn King's latest comments about the likely squeeze on take-home pay, British business leaders would be forgiven for having a rather less rose-tinted view.

This week's shindig at Davos - which bears the typically preposterous title 'Shared Norms for a New Reality' - is focusing on lessons learned from the financial crisis. And according to PwC, the 1,200 CEOs from 69 countries surveyed see plenty of light at the end of the tunnel. Business leaders 'have emerged from the bunker mentality of surviving the recession,' proclaimed PwC chairman Dennis Nally, and now see 'renewed opportunity for growth' as they take advantage of 'global economic conditions and increased customer demands.'

However, it was noticeable that European bosses were, perhaps not surprisingly, the least optimistic of all those surveyed. And after yesterday's grim news on the UK economy (which came out after this survey was completed, incidentally) we suspect those Brits in the crowd are feeling particularly glum - unless of course they make most of their money in emerging markets, which seem in relatively rip-roaring health.

Mervyn King has been doing his best to add to the gloom, too; speaking in Newcastle last night, the Bank of England Governor said that a fall in UK take-home pay and a drop in living standards was 'the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies'. His view is that the weak pound and rising commodity prices will push up inflation, and with the state of the labour market ensuring that wages are pretty much stagnant, that means we're all going to have fewer pennies in our pocket at the end of the month.

That's depressing enough for us, but it also spells trouble for businesses that rely on us buying their products and services. However much the Government keeps insisting that we're on the right track, it's a bit hard to see the UK seeing much sign of that fabled 'increased customer demand' any time soon – particularly as the spending cuts and tax hikes really start to bite.
Economy Misc

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