Davos 2017: Soros says UK in denial over Brexit, and May won't last – Day Three as it happened
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Billionaire George Soros tells a dinner in Davos that inflation will drive down living standards in UK, that Trump will fail, and that Europe is too complicated
Here are some of the key quotes from George Soros, for those who missed his interview here in Davos tonight (delegates are now polishing off the pudding and wine in the Seehof Hotel)
In my opinion is is unlikely that prime minister May is actually going to remain in power. Already she has a very divided cabinet, a very small majority in parliament.And I think she will not last.
At the moment the people in the UK are in denial. The current economic situation is not as bad as was predicted, and they live in hope.But as the currency depreciates, and inflation will be the driving force, this will lead to declining living standards.
This is going to take some time, but when it does happen they’ll realise that they are earning less than before because wages won’t rise as fast as the cost of living.
The divorce is going to take a very long time. Its much harder to divorce than to get married, so I think the desire for rapprochement will develop, and in theory or maybe even in practice you could have a situation in 2019 or 2020 when Britain will leave the EU because it does have to take place, but they could leave on a Friday but join over the weekend and have the new arrangement in place in Monday morning.
Hmmmm, maybe George.
And on Europe, the billionaire who broke the Bank of England on Black Wednesday said:
“One has to recognize that the European Union has become too complicated and people are alienated. The anti-European parties are gathering force.”
George Soros now declares that it is unlikely that prime minister Theresa May will remain in power for long.
She has already got a divided cabinet and a small majority in parliament....I think she will not last, Soros tells his audience of Davos delegates.
The people in the UK are in denial, Soros continues. The current economic situation is not as bad as expected, so they live in hope, but as the currency depreciates, inflation will lead to a decline in living standards.
It will take time, but when it happens they will realise they are not as well off as before, Soros concludes.
Soros: Trump wants to be a dictator, but he won't be
Hello again from the Seehof hotel in Davos, where veteran billionaire investor/philantropist George Soros is giving his views on the state of the world.
On Donald Trump, Soros says he has described Trump as an imposter, a conman and a would-be dictator.
But he is confident that the constitution of the US and division of power will hold sway.
He would be a dictator if he could get away with it..but he won’t.
When Trump oversteps the mark, they will fight back, Soros predicts.
He believes that Trump was surprised to win the November election.....he was engaged in building his brand and his success in attracting crowds.
Soros says he’s convinced that Trump will fail - not because people want him to, but because the ideas that drive him are essentially contradictory.
For example, he has three chiefs of staff instead of one, and there will be tensions within his cabinet - meaning a lot of infighting in future.
And that means that the markets won’t maintain recent gains, Soros predicts:
Right now, uncertainty is at its peak, and uncertainty is the enemy of long-term investment.
It’s all winding down in the WEF conference centre now; but we’ll hoping to cover an interview/dinner with George Soros at around 8.30pm local time (7.30pm GMT)
Mario Draghi’s dovish comments at the latest European Central Bank meeting sent the euro lower and also helped push European markets marginally into the red.
And with the dollar also weaker against the pound, the FTSE 100 also fell back - unsurprising given much of its recent gains have been due to the weakness of sterling boosting overseas earners. After Theresa May at Davos and Draghi at the ECB, investors are now awaiting Donald Trump’s inauguration on Friday with some nervousness. Connor Campbell, financial analyst at Spreadex, said:
With the [European] central bank predictably keeping rates on hold attention turned to Draghi’s statement and subsequent Q&A. The Italian struck a more dovish tone than was expected, dismissing the Eurozone’s recent CPI growth, arguing that ‘there are no signs yet of a convincing upward trend in underlying inflation’, while stating that the ECB stands ‘ready to increase [its] asset purchases in size and duration if necessary’.
This was exactly what the euro didn’t want to hear, causing the currency to shed 0.7% against both the dollar and the pound, leaving it at a 10 day low against the latter...
In the UK the pound’s gains, though less robust against the dollar than they were in the immediate aftermath of Theresa May’s Davos speech, continued to suppress the FTSE, the index dropping by just shy of half a percent as the day went on. The FTSE wasn’t helped by the sharp declines seen by its key commodity stocks, as well as the substantial 5% drop incurred by Royal Mail following its disappointing third quarter report this morning.
Ahead of Donald Trump’s inauguration tomorrow the Dow Jones was relatively subdued, trickling 0.2% lower after the bell. As for the day’s data, the Philly Fed manufacturing index smashed expectations at 23.6, the highest reading in 2 and a half years, while at 234,000 jobless claims once again neared a 43 year low.
The final scores showed:
The FTSE 100 finished down 0.54% at 7208.44
Germany’s Dax dipped 0.02% to 11,596.89
France’s Cac closed 0.25% lower at 4841.14
On Wall Street, the Dow Jones Industrial Average is currently down 51 points or 0.16%.
As for the pound, it is up 0.45% against the dollar at $1.2311 and up 0.52% against the euro at €1.1590.
Here’s part of the transcript of Theresa May’s interview with Bloomberg TV.
On bank jobs leaving London:
Well I’ve had positive meetings with bank CEOs here and also with CEOs from tech companies and others and the message I’ve brought here to Davos is that Britain outside of the European Union, we want to build a truly global Britain. A Britain that is an advocate for free trade, for free markets around the world and a Britain that is ensuring that we are taking those opportunities. I want to negotiate a good free trade agreement with the European Union when we come out, I want the best possible access for trading with and operating within the European single market, for both goods and services. I value financial services in the City of London and I want to ensure that we can keep financial services in the City of London and that global Britain, I believe will do just that.
On the customs union:
Well a customs union of course is a separate issue from the free trade agreement. And what I want to see is as frictionless a border as possible. I do want to be able, for the UK to be able, to negotiate free trade deals around the rest of the world. We already have countries, I mean earlier today Australia has re-iterated its commitment to a free trade deal with the United Kingdom. We have countries around the world who want to talk to us about this, we’ve already started talking to many about free trade agreements. So we want to look globally, not just to the EU but out around the whole world: a truly global Britain, bringing prosperity and jobs to the UK.
On globalisation:
I think what’s important is that those of us who believe, as I do, in free trade, in free markets, in globalisation, it’s important that we recognise that for some people that this has left them, has passed them by. That they’re just getting by rather than getting on and so it is important and I’ve said this right from the very beginning of my time as prime minister, that I want a country and an economy that works for everyone. One of the things we’ll be doing in the UK is introducing a modern industrial strategy that’s about the economy of the future, it’s about ensuring that business can grow and is encouraged to grow in the UK, but it’s also about ensuring that the benefits of prosperity are available across the whole country, we see that economic growth and prosperity for everyone.
On the pound’s weakness:
Well, we’ve seen different movements in the pound over the last six months, but what we’ve also seen, through the other economic data that we’ve seen, is the strength of the UK economy. You know, the IMF has made the point, we were last year the fastest growing major economy – only this week we had good figures which showed unemployment coming down once again. So we see a fundamental strength in the UK economy. I believe that’s a good strength, I believe it’s an economy that people want to invest in, and in fact, since the Brexit vote, we’ve seen major companies like Nissan, like Google, Facebook actually making investments. SoftBank taking over Arm in the UK, making very significant investments here in the United Kingdom.
And on technology and jobs:
Well I think it’s interesting if you look at technology, and of course technology is changing the workplace, but also technology creates jobs, and often creates jobs in areas that are unexpected. So it isn’t quite a zero-sum game in that sense. But I think what people feel very often is that sometimes they see people playing by – appearing to play by a different set of rules. Sometimes there are some companies, the behaviour of which, or perhaps individuals within them, suggests to the public that actually there’s one set of rules for those people and another set for ordinary hardworking families. I want to show that business is responsible, that people are playing by the same rules, and that together we can grow, that we can develop that prosperity that will be good for everyone.
Theresa May has been speaking on TV at Davos, and has told the BBC that she has had positive discussions with banks about the benefits of the City of London, and how to build on that for the future.
This comment comes of course as banks continue to suggest they will move employees out of London as a consequence of the UK leaving the EU.
Asked about the weakness in sterling on Bloomberg TV, she did not want to get into a discussion about the value of the pound but pointed to economic data showing the fundamental strength of the UK economy.
She also repeated that the UK had already begun discussions with other countries about free trade deals.
Most of what UK PM May said in that BTV interview has already been discounted... GBP steady
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