IMF to issue new growth forecasts ahead of Davos start * Carillion: projects continuing satisfactorily, says Moody’s * Lord O’Neill optimistic about UK economy despite Brexit * Bookmaker shares slide on betting machines report 12.17pm GMT Greece is edging closer to an exit from its bailout programme: #Eurogroup due to declare today that 3rd review of #Greece's 3rd bailout is more or less done. That will mean 12 reviews down since 2010, just one more (hopefully) to go https://t.co/DcLtI1ncnk 11.37am GMT The world faces a massive and urgent need to reskill millions of workers whose jobs will be eliminated by technological change in the next few years. A new report from the World Economic Forum shows that employees across the economy risk suffer falling incomes or unemployment as the 4th industrial revolution disrupts the workplace. To avoid this fate, millions of people need to be helped into new roles - probably into a whole new career path. 11.23am GMT Time for a market update. The FTSE 100 has recovered some of its poise after its early dip, and is now up around 0.07%. Stock markets in Europe are a mixed bag this morning as investors access the political landscape. The shutdown of the US government hasn’t spooked investors as there was a similar muted reaction the last time it happened in 2013, but nor has it given traders a reason to buy into the market. In Germany the SPD have agreed to begin formal talks with Angela Merkel’s CDU. This is a step in the right direction for German politics and traders will be watching it closely. 10.23am GMT In the wake of the collapse of Carillion, rival companies have been successful in their contingency plans to keep projects going, says ratings agency Moody’s. But they could face having to sign new contracts on less favourable terms, it adds in a new report: Project companies are satisfactorily implementing contingency plans to avoid an impact on services or cash flows after the liquidation of British construction and services firm Carillion. However, moderate credit deterioration is possible because some project companies will need to sign new contracts with alternative subcontractors, potentially with less favourable terms or pricing... “Projects continue to provide contracted services despite Carillion’s liquidation,” said Kunal Govindia, a Moody’s Assistant Vice President and co-author of the report. “However, if replacement subcontractors are procured it could lead to an increase in operating costs, although there are mitigating factors.” As part of their contingency planning, project companies had engaged with possible replacement subcontractors. Moody’s expects that new subcontractors will join the various projects over the coming months. However, there is no guarantee that the new contract will be on the same terms and pricing. Project companies could potentially face increased FM costs without an accompanying increase in revenue. Two factors mitigate this risk. Firstly, soft FM services are benchmarked periodically and cost increases are passed to offtakers. Secondly, projects are resilient to FM cost increases, as demonstrated by generally adequate cost increase sensitivities. 9.25am GMT We’ve seen a number of companies jumping on the cryptocurrency bandwagon (step forward Long Island Iced Tea) and seeing their shares soar. And it hasn’t peaked yet, it seems: Sigh. "Stapleton Capital, a company originally formed to acquire a company or business in the telecoms sector, announces that the Directors have identified a number of blockchain technology investment opportunities… change of name of the Company to Blockchain Worldwide plc" pic.twitter.com/CvTALlU4j7 9.17am GMT A rather downbeat survey on UK household finances from IHS Markit: UK households gloomier about their finances in January amid rising prices. Need for debt rising at fastest rate in nearly a year https://t.co/TzVktgc5v0 pic.twitter.com/aEiy8NBRW5 8.53am GMT You would imagine stock markets would be rather edgy at the prospect of a US government shutdown. But apparently not. The Dow Jones Industrial Average closed up 53 points on Friday, and the futures are indicating a small decline at today’s open of around 44 points. And the long term impact on US markets seems limited: As the US government shutdown moves into its third day the effects of a closure have little impact on the S&P over the long-term... pic.twitter.com/67XUAjnF1s 8.45am GMT A new report on the growing gap between rich and poor is timely in the run up to the Davos meeting. Larry Elliott writes: The development charity Oxfam has called for action to tackle the growing gap between rich and poor as it launched a new report showing that 42 people hold as much wealth as the 3.7 billion who make up the poorest half of the world’s population. In a report published on Monday to coincide with the gathering of some of the world’s richest people at the World Economic Forum in Davos, Oxfam said billionaires had been created at a record rate of one every two days over the past 12 months, at a time when the bottom 50% of the world’s population had seen no increase in wealth. It added that 82% of the global wealth generated in 2017 went to the most wealthy 1%. Related: Inequality gap widens as 42 people hold same wealth as 3.7bn poorest Related: Davos – in avalanche country – conceals an overriding fragility | Larry Elliott Related: Climate change, AI and harassment – the hottest topics at this year’s Davos 8.40am GMT Ahead of the latest World Economic Outlook, Lord Jim O’Neill - the former Conservative treasury minister and remain supporter - is optimistic about the outlook for the UK. In an interview with BBC economics editor Kamal Ahmed, Lord O’Neill said the UK was benefiting from better than expected global growth, and forecasts are likely to be upgraded, dwarfing the more gloomy predictions about the effects of Brexit. I certainly wouldn’t have thought the UK economy would be as robust as it currently seems. That is because some parts of the country, led by the North West [of England], are actually doing way better than people seem to realise or appreciate. As well as this crucial fact, the rest of the world is also doing way better than many people would have thought a year ago, so it makes it easier for the UK. If that’s the worst that Brexit will deliver, then I wouldn’t worry about it. Now, my own view is if we go for a really hard Brexit or a no-deal Brexit, we’ll probably suffer more than that 3%. But if it is only 3%, what’s going on with the rest of the world - helping us - and with productivity improving, that will easily dwarf a 3% hit over 13 years, easily. I’m almost embarrassed to accept that it might sound like that. Because of course in principle I share the views of many that Brexit is a really weird thing for the UK to impose on itself from an economic perspective. And maybe this [better global growth] means the country’s going to be able to cope with Brexit better than certainly somebody like me might have thought some time ago. 8.13am GMT Bookmakers’ shares are showing losses on reports that the UK government is planning to cut the maximum stake on fixed odds betting terminals from £100 to £2. It said in October it would reduce the stake to between £50 and £2, to tackle the “crack cocaine of high street gambling.” A consultation period ends on Tuesday. William Hill is down 13%, Ladbrokes Coral has lost 12% and Paddy Power Betfair has fallen 2.6%. Analyst Alistair Ross at Investec said: A DCMS official apparently indicated that while no formal decision has been made, £2 is ‘highly likely’. However Matthew Hancock, the new Secretary of State, has only just been appointed (9 January), and we think it is unlikely that a final decision on FOBT staking limits has actually been made. We also note that the FOBT consultation only closes tomorrow, and suspect speculation on the final outcome is premature. 8.08am GMT As expected it has been an uncertain start to the week for European markets. The FTSE 100 has fallen 0.13%, while France’s Cac is down 0.1%, Italy’s FTSE MIB has lost 0.33% but Spain’s Ibex is up 0.3%. 7.57am GMT More on the German coalition talks. Here’s ING economist Carsten Brzeski: Given the very detailed informative talks in January, the official coalition talks should not take too long - if all parties stick to the desired results. However, the SPD delegate pushed the party leaders to renegotiate details of the informative talks regarding the healthcare system, the labour market and immigration, increasing pressure on the SPD to bring some new political achievements from the forthcoming talks. The willingness of the CDU to really re-open some of the most controversial issues seems to be very limited. ... However, once there is an official coalition agreement, all SPD party members, more than 440,000, will get the chance to vote for or against it. Compared with today’s party congress, this party members’ vote will be a much tougher nut to crack. Related: Germany's SPD gives cautious green light to Merkel coalition talks 7.42am GMT GOOD MORNING, AND WELCOME TO OUR ROLLING COVERAGE OF THE WORLD ECONOMY, THE FINANCIAL MARKETS, THE EUROZONE AND BUSINESS. It’s a fairly quiet start to the week at the moment but it is the quiet before the storm. The data calendar is pretty empty today. This leaves markets at the mercy of media coverage of events at the World Economic Forum in Davos. Significant policy announcements are unlikely, but Davos does give journalists an opportunity to pontificate while wearing silly hats. Related: Davos gathering prompts locals to cash-in and leave Having seen the US government shutdown confirmed after last week’s US close there might be a case for suggesting that stocks may well be adversely affected. This seems unlikely in the long run given that the shutdown, at least in the short term, is likely to be fairly limited in nature, given that by and large economic data from across the globe continues to show a fairly robust level of economic activity. Furthermore, dysfunctional US politics isn’t really anything new, in fact dysfunctional politics appears to be becoming the norm, not only in the US, but the world over, even if in Germany we do appear to be starting to make progress on the formation of a new government after the German SPD party membership granted permission for the party leaders to begin new coalition talks with Angela Merkel. European Opening Calls:#FTSE 7719 -0.15%#DAX 13469 +0.26%#CAC 5532 +0.10%#MIB 23737 -0.05%#IBEX 10501 +0.21% Continue reading...
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