In the News

A very different World Economic Forum this year?

Vicki Woolven

18th January 2023

The annual World Economic Forum (WEF) is taking place in the famous ski resort of Davos in Switzerland, drawing in government ministers and chief executives from across the globe, who are hoping for some positive news about the world economy.

For the last three years the focus has been on inflation and surging debt, and the threat of recession, in response to the Covid pandemic and the war in Ukraine. However there are some positive signs of recovery - global inflation is starting to slow down, and supply chains are finally catching up after getting stuck during the pandemic.

China's 'great reopening' has sounded the end of strict zero-Covid restrictions, and inflation seems to have peaked, with most of Europe ending its dependence on Russian gas - meaning that global production and shipping costs should decrease.

However UK officials in Davos are concerned about how far inflation will fall, and where we sit in this very different world.

And there are concerns that the threat of a transatlantic green trade war could dominate the forum - new US legislation to boost the green economy includes a £300 billion package of subsidies for electric cars, however they have to be manufactured in the US. The Inflation Reduction Act is also enticing some European TNCs to relocate their production operations to the US. The US government defends its new legislation by stating it is aimed at competing with China, but EU leaders are looking at ways to respond and will possibly bring in similar 'Buy European' incentives.

The possibly is that these three major trade blocs (the US, China and the EU) could attempt to out-subsidise each other, in a very expensive game of global one-upmanship. And then what will the UK do? The current global economy is a very different beast than the one that Boris Johnson tried to grapple with post-Brexit. Would 'Buy European' incentives even include the UK?

The final concern is what the long anticipated technological revolution could mean for us all - many of you will have played around with ChatGPT over the last couple of weeks, particularly in terms of its marking and question setting potential, but there are worries that it have such an impact that it could result in millions of jobs becoming redundant, causing a global economic shock.

Anyway, whatever happens there will be some huge policy and investment decisions made at Davos this week, which will have huge consequences on how much things cost and where they are made.

Vicki Woolven

Vicki Woolven is Subject Lead for Key Stage 4 Humanities at tutor2u. Vicki previously worked as a Head of Geography and Sociology for many years, and has been a content writer, senior examiner and local authority Key Practitioner for Humanities.

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