Rolling coverage from the World Economic Forum in Davos, and the ECB’s long-awaited decision on quantitative easing. Follow WEF live-stream here.Ray Dalio: ECB must actLagarde: US to raise rates in mid-2015The Agenda: Merkel, Lagarde, Gordon Brown...George Osborne meeting with UK business leadersUBS Weber: Eurozone QE may not be right ideaDavos: the complete guide 10.09am GMT Finland will not be willing to consider renegotiating Greece’s debts if the left-wing Syriza party wins power, PM Alex Stubb declared to the Davos conference hall.Asked about Sunday’s Greek elections, Stubb reiterated Finland’s hardline position on the issue, potentially drawing the battle lines with Alexis Tsipras, Syriza’s leader.Ireland is back in the markets, Portugal is back in the markets. Greece is trying to get back.We will deal with any democratically elected government Greece has. But it will be very hard for us to forgive any loans or restructure any debt at this moment. 9.55am GMT Finland’s prime minister is putting a brave face on the prospect of a Eurozone QE package today.Alex Stubb told Davos:We firmly believe in the independence of the ECB. Whatever they do today, we will welcome with a smile. 9.49am GMT Dutch PM Mark Rutte isn’t happy that some countries (France, perhaps?) are still debating whether to take tough decisions on their economy.Europe needs to do a lot more to become competitive, he tells Davos. 9.47am GMT The weakening in the euro has been great for Ireland, Enda Kenny declares, by helping exports and tourism. That chimes with Christine Lagarde’s point earlier today about QE expectations already helping.His big hope is that the young people who left Ireland to look for work will be able to come home, if they choose, bringing new skills. 9.44am GMT Irish leader Enda Kenny says Ireland has made important progress since the debt crisis, lowering its deficit, borrowing at record low levels, returning to growth (4% this year, perhaps) and cutting unemployment.It shows the merits of working closely with the commission and with the ECB, 9.40am GMT Antony Jenkins, the chief executive of Barclays, is in Davos and has been speaking to Bloomberg Television.Here is what he had to say about the recent market volatility:The one certain thing is that we live in a very uncertain world – look at the price. What is driving this volatility is an increase in geopolitical instability, and structurally lower macroeconomic growth that creates pressure in local economies. We can expect volatility in commodities and currencies for the foreseeable future.Volatility affects every business, but the point for business leaders like me is to build resilience into you business. If you go back a decade or so, people like me were talking about getting bigger. The reality today is the constraints on balance sheets [with more capital to be held] requires you have to focus. That’s what we’ve done in the investment bank, focusing on where we can generate returns for our customers. I’ve already said the investment bank will be no more than 30% of the business. 9.31am GMT Sigmar Gabriel also points out that in 2003, Germany and France broke the measures in the Maastricht treaty. But there’s a big difference. We started our structural reforms then, but France did not. We’d have had to make even deeper savings to stick within Maastricht. 9.29am GMT The Europe debate starts with a question on QE, for Germany’s vice-chancellor: Have we reached an inflation point where despite all the structural reforms, we need a more active and pro-active stimulus for Europe? 9.21am GMT The main hall at Davos is now filling up (slowly) for a debate on Europe, starring four European leaders. They’re discussing the twin challenges of stability and growth.They are Latvia’s PM Laimdota Straujuma, Irish leader Enda Kenny, Dutch PM Mark Rutte and Finland’s PM Alex Stubb.Sign of Europe's decline. Congress hall at #WEF15 weirdly empty for big euro debate. pic.twitter.com/GhPZax9Tl1 9.07am GMT Christine Lagarde’s view is that a eurozone quantitative easing programme is already having an effect, as markets have pushed down the euro in anticipation.But as flagged earlier, Larry Summers argue that the impact of QE is limited:QE in Europe "has already worked" says @Lagarde when look at euro. @BloombergTV #Davos2015Summers and Lagarde dispute on ECB QE at #WEF15. Summers: effects small. Lagarde says already helped devalue euro pic.twitter.com/rcBFaceMms 9.03am GMT Santander chief Ana Botin was more upbeat, though -- with QE on the way, Europe is heading towards recovery with a more stable and effective currency union. And that’s the end of the session. 9.03am GMT European investors appear to be in a cautiously optimistic mood ahead of the European Central Bank’s big announcement on quantitative easing. Germany, which has been strong opponent of QE, is slightly down.All major indices are slightly up, apart from Germany’s DAX. 8.59am GMT With European borrowing costs at such record lows, policymakers must realise that they have more options, argues Larry Summers:I do not accept that there is limited room for advanced borrowing by Europe... there is limited imagination, he says.Does anyone think that Europe has a basis for growth if the strategy is QE and asking the south to do more structural reforms?We’re all for QE in Europe. We can’t afford not to have it. It’s necessary, but it’s not sufficient. 8.53am GMT It’s a big mistake to think that quantitative easing is some magic cure for the world’s ills, argues Larry Summers.I agree with Christine [Lagarde] that QE has already had significant impact, and that’s why I’m worried.We’ve already had a set of positive developments, and the economic forecasts are pretty dismal from here. 8.48am GMT Europe’s youth unemployment crisis shows the need for a big quantitative easing programme from the ECB, says Ray Dalio, head of investment firm Bridgewater Associates.Sitting alongside Lagarde, he explains:In Italy and Spain, youth unemployment is 50%. There will be a lost generation.There needs to be forceful action or there is going to be political extremism. 8.39am GMT Chancellor George Osborne’s breakfast meeting with bosses of major UK companies has broken up, Jill Treanor reports.While those who left were tight lipped about the conversation that took place, it seems that George Osborne was keen for business people to shout out about their ability to create jobs.Around 30 chief executives and chairman met the Chancellor, who sat alongside the head of the CBI John Cridland. 8.34am GMT Lagarde isn’t impressed by the argument that the US economy is too weak to support a rate hike:If the US is in a bad place, we are short of any engine of growth. 8.32am GMT Larry Summers, the former US Treasury secretary, argues strongly that the Federal Reserve should not raise rates yet.He tells the Davos panel that the risks are “enormously asymmetric..of setting off a spiral towards deflation”.The Fed should not be fighting against inflation until it sees the whites of its eyes. 8.28am GMT Raising US interest rates will strengthen the US dollar even more, and cause a chilling effect on the US economy, Gary Cohn adds (he’s President and Chief Operating Officer of Goldman). 8.22am GMT 8.18am GMT Gary Cohn of Goldman Sachs isn’t so confident that the US will raise rates as early as this summer, as Lagarde suggests.He tells Davos that while the US economy is growing, he’s concerned about the Fed’s ability to raise rates given what’s happening in the rest of the world, in Japan and Europe. 8.15am GMT Christine Lagarde has predicted that the US Federal Reserve will raise interest rates in 2015, probably around the middle of this year.The Federal Reserve is probably going to raise rates this year. Our expectation at the IMF is it is more likely to happen in mid-year, rather than the end of 2015, contrary to what the markets expect. 8.02am GMT Good advanced planning by HSBC, which chose “Europe at the Crossroads” as the subject for its breakfast meeting long before it knew that today would be the day when Draghi was to make his big announcement.Economics editor Larry Elliott was there, and reports:Zhu Min, deputy managing director of the IMF, says he is worried about the collapse in investment as a share of GDP across the euro zone. Min said “The ECB should take bold action. An accommodative monetary policy (a posh way of saying “do QE”) will create the policy space for other policy action as well. The ECB balance sheet has shrunk in the past 18 months. It needs to pump liquidity into the system.”But Anne Richards, chief investment officer at Aberdeen Asset Management, quotes John Maynard Keynes when she says QE will be like “pushing on a piece of string”. Banks will use the extra liquidity provided by the ECB to shore up their balance sheets so they won’t lend it out to the real economy, she says. 7.58am GMT Reminder, you can follow a live video-feed from WEF here. 7.56am GMT It’s a huge day for the eurozone, and for Mario Draghi personally. Can he deliver “whatever it takes” to save the euro, as he promised back in the summer of 2012?Con permiso Mr Draghi, the hall is rented, the orchestra engaged, now it’s time to see if you can dance. 7.52am GMT Angela Merkel and Mario Draghi are two of the most powerful figures in Europe right now, so it’s a little irksome that they’ll be speaking at the same time this afternoon......Good morning from Davos. Tdy is Merkel (#wef15) vs Draghi (FFM). Both front press at same time over plans for Europe. pic.twitter.com/S90OG2SLqI 7.47am GMT The ex-head of the Bundesbank, Axel Weber, is arguing against a big eurozone QE package....even as his former colleagues at the ECB dicuss the idea in Frankfurt..@UBS Chairman Axel Weber tells @flacqua & @GuyJohnsonTV in #Davos: Doing more of the same - #QE - is not necessarily a good recipe..@UBS Chairman Axel Weber tells @GuyJohnsonTV in #Davos: I walked 16.5km in one day in #Davos yesterday. Really?!?!? 7.34am GMT Climate change continues to be a big issue at Davos. Last night, the president of the World Bank (via the Guardian) put his weight behind the issue.Jim Kim told us:“We are seeing the accelerated impact of climate change. Last year was the hottest on record. That matters. Extreme weather is real. It’s a complete no brainer to move towards cleaner more liveable cities,” 7.26am GMT The bosses of the biggest companies in the UK have piled into a private breakfast with Chancellor George Osborne in Davos, my colleague Jill Treanor reports.Salmon and scrambled eggs are on the menu. Among those in attendance are Gavin Patterson, boss of BT, City heavy-hitter Sir Roger Carr and Barclays chairman Sir David Walker. Around 30 people are in attendance. 7.17am GMT Good morning from Davos, Switzerland, where the second day of the World Economic Forum is underway. Continue reading...
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