Davos 2016: George Osborne says Google tax deal is a 'major success' - live

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Powered by Guardian.co.ukThis article titled “Davos 2016: George Osborne says Google tax deal is a ‘major success’ – live” was written by Graeme Wearden in Davos, for theguardian.com on Saturday 23rd January 2016 12.25 UTC





George Osborne’s comments won’t spare Google from a grilling in parliament over the tax deal.


There is plenty of concern that £130m is a rather meagre sum, given Google’s huge revenue flows.


And the Public Accounts Committee is determined to dig into it.


Meg Hillier MP, chair of the PAC, said overnight that she was “shocked” by the workaround methods used by multinationals. It doesn’t reflect well on the tax officials, either:


“HMRC now needs to assure taxpayers that it will keep up the pressure to tackle whatever the next emerging issue is in real time, rather than years later.


“It is effectively admitting it pulled in too little tax from Google for nine out of ten years.


“This is not a great success rate and the Public Accounts Committee will be calling in HMRC and Google to explain.






George Osborne: Google tax deal is a big success



George Osborne has told the Guardian that the £130m tax deal announced with Google overnight is a “huge step forward”


Speaking just after his panel debate in Davos, the chancellor said he regarded it as a major success for the government.


He told us:


This is a major success of our tax policy.


We’ve got Google to pay taxes and I think that is a huge step forward and addresses that perfectly legitimate public anger that large corporations have not been paying tax. I think it’s a really positive step.


I hope to see more firms follow suit and of course I’ve introduced a diverted profits tax which will require this going forward. So I think it’s a big step forward and a victory for the government”.


Overnight, the search giant announced that it will pay £130m to the UK – a decade’s worth of tax. It will also pay more taxes in the UK in future, as part of a shake-up of the way the multinational pays tax.


Osborne’s comments at Davos come after Labour shadow chancellor, John McDonnell, criticised the deal.


My colleague Kevin Rawlinson reports:


People will be “sceptical” about what he said looked like a “sweetheart deal”, he told BBC Radio 4’s Today programme on Saturday, adding that HMRC seemed to have settled for a “relatively trivial amount of money.”


McDonnell will be asking HMRC to publish full details of what it believed Google owed. He said he would raise the issue in Parliament next week as the issue needed “wider scrutiny”.



Updated






The session ended with Christine Lagarde calling for a new way of measuring economic success:



I’ll do a more thorough wrap-up in a minute.







Tidjane Thiam, head of Credit Suisse, reckons we are not on the brink of another banking crisis despite the recent market turmoil.








Q: Does Christine Lagarde think China needs capital controls?


Lagarde replies that it wouldn’t be a particularly good idea for Beijing to burn through all its reserves propping up the yuan.


China needs to give clarity, certainty and one message on exactly how the exchange mechanism works, and what the yuan is being measured against.






Kuroda: China may need capital controls



Onto China, which has been eating into its foreign exchange reserves in an attempt to support the yuan.


Kuroda says that Beijing faces a tough battle, and may need consider new restrictions to prevent money leaving the country.


He says:


China’s authorities have been struggling to avoid excessive depreciation or appreciation of its currency while also maintaining an accommodative monetary stance.


My personal view, which may not be shared by the Chinese authorities is that in this somewhat contradictory situation, capital controls could be useful to manage the exchange rate as well as domestic monetary policy in a consistent and appropriate way.






Japanese central bank chief: We’ll do whatever it takes to get inflation up



Japanese central bank governor Kuroda says that inflation, currently around zero, could strengthen significantly if the oil price recovers.


And if not, he’s prepared to do more. Echoing the famous pledge from ECB chief Mario Draghi, Kuroda says:


The Bank of Japan is fully committed to achieving the price stability target of 2% and will do whatever it takes to achieve that target, at the earliest stage.


We don’t believe there are any limits to our policy tools, he adds.








Japan’s central bank chief, Haruhiko Kuroda, says he doesn’t believe China’s economy will crash.


Markets have been volatile this year, against heightened uncertainty over China’s economy and oil prices, he says. But he does not share the pessimistic view about the implications.


China’s slowdown is due to the challenge of rebalancing its economy.














Q: Will Britain be in the EU in a year?


Osborne says he is optimistic of getting a good deal for Britain and the European Union.


And he insists that Europe needs to reform itself.


I don’t want my continent priced out of the world economy.


And if the British people see we are delivering that change across Europe, they will vote to stay in a reformed EU.



Updated





Osborne: We can get a deal in February



Osborne says that Europe likes to cut a deal at the 11th hour, because the Greek banks need to open or a bond needs paying.


But we aren’t behaving like the greek government. We have taken a much more measured approach, approaching Europe as friends, colleagues and allies.


Osborne says that in “a mature and measured way” we can get that agreement, maybe at the February meeting.


If it’s not a good deal, Britain won’t sign.


But given all the challenges in the EU, I think it’s in Europe’s interests to give us a deal that works for all member states.




W






Osborne: there is goodwill for a deal with Europe



Q: Is there any chance of a deal in the next few weeks that will satisfy the huge eurosceptical forces in the UK?


There will be people who want to leave Europe, come what may, and some who want to stay, George Osborne replies.


But if David Cameron can come back with a creditble reform packate, we can make a case for staying.


There is goodwill out there, we now have to make it happen.







Britain has three priorities through our EU renegotiation, says Osborne:


We want to create a more competitive European union, to create more jobs and growth


Want to address concerns about migration.


Mainstream governments should not ignore these pressure, but should address the legitimate concerns that can fuel them.


Thirdly, we need a better working relationship between euro and non-euro countries, and the fact that large countries such as the UK will not be in the eurozone.


There is a remorseless logic that the eurozone needs ever-closer union, and Britain does not want to be part of it, Osborne concludes.







Now George Osborne speaks, saying his ‘clear economic plan’ has given the UK a pretty secure footing going forwards.


But we don’t duck big decisions – the Scottish referendum, for example, has “checked a move towards the break-up” of the UK.


And with the EU referendum, Britain is seeking a more competitive EU.


I have sat on panels for five years, hearing people talk about creating more competition. Now we need to do it, says Osborne.


And he cites an old Chinese proverb: Talk does not cook rice.






Lagarde: Brexit is a big concern



On Europe, Lagarde says the economy is in better shape than a year ago,.


But the IMF has two big concerns:


One is Brexit, and whether there is a deal between the United Kingdom and the rest of Europe.


We hope very much [there is a deal], as it would really be conducive to more stability and a more cohesive economic zone.


The second is the refugee crisis, which Lagarde calls a ‘make-or-break’ issue for Europe, Lagarde adds.


If it is well-handled and the integration process is handled well, it will be an upside for the eurozone, boosting growth particularly in Sweden and Germany.


So do you agree that the refugee crisis is ‘make or break’ for the Schengen area?


Speaking personally, not as MD as the IMF, Yes, I think so, Lagarde replies.




Updated





Lagarde: World faces four downside risks



Lagarde says there are four key risks:


  • China’s economic rebalancing, as it moves from industry to service, export to domestic market,and investment to consumption.

  • Commodity prices, where the fall has accelerated in the last 18 months.

  • Asynchronous monetary policies around the world, creating capital flows as money returns to the US, depreciating the currencies of some emerging markets.

  • And emerging markets – Lagarde says India and China are performing much better than Brazil or Russia.

[Is this the death of the BRICS idea?]







Christine Lagarde says the IMF believes the world economy will grow at a faster rate, even though it cut its growth forecasts this week.


From 3.1% in 2015, the IMF expects growth of 3.4% in 2016 and 3.6% in 2017.







Credit Suisse CEO Tidjane Thiam says the financial markets have had their worst start to a year ever.


Fears over China’s economy are a prime factor, prompting market turmoil and concerns that we could be heading into a global recession.


Massive outflows from asset managers, some from sovereign wealth funds, as they face losses on their


And there is a shortage of liquidity in the market, which means shares and bonds are more volatile.


But investors are over-reacting, and should remember that the fall in the oil price is good for consumers, good for Europe, and good for 5 billion people who are net importers of oil.







The FT’s Martin Wolf is chairing the debate, and spending several minutes running through the state of play today.


And it’s not great – world stock markets are in turmoil, everyone’s worrying about China, emerging economies face a tough year, the US economy may be slowing too, the migration crisis is threatening European Union, populism is on the rise, and Britain may be heading towards Brexit.


What on earth is going on, he demands?







Reminder, the panel are UK chancellor George Osborne, Japanese central bank governor Haruhiko Kuroda, IMF managing director Christine Lagarde, Indian finance minister Arun Jaitley, and Credit Suisse CEO Tidjane Thiam.






VIDEO: Watch the debate here



Cowbells are ringing across the Davos conference centre (yes, really), signalling that the debate on the Global Economy is starting now.



The debate, live




World and economic leaders hold informal meeting



This year, the Guardian’s Davos bureau is a prime table at the heart of WEF, just outside the office of founder Klaus Schwab.


And from there, we’ve seen a string of senior politicians and top central bankers emerge from a meeting. That includes the IMF’s Christine Lagarde, Bank of England governor Mark Carney, Finland’s finance minister Alex Stubb, and Axel Weber of UBS.


It’s not a crisis meeting, though, but an IGWEL – an informal gathering of world and economic leaders.


Stubb has helpfully tweeted from the meeting.









Gideon Rachman, the Financial Times’s top foreign affairs writer, reckons that this year’s World Economic Forum has been dogged by the “shadow of populism”:


Davos delegates shouldn’t be surprised that the public are looking at the state of the world economy, and the political landscape, and decide that a change is needed.


But the sort of populism promoted by Donald Trump is rather alien, and alarming, for those at WEF.


Gideon writes:


The shadow of Donald Trump has loomed over Davos this year. So has the prospect that refugee flows into Europe will undermine centrist leaders such as Angela Merkel, the German chancellor. More broadly, those at Davos are aware that they increasingly represent the “unpopular” — the business and political elites that are the targets of public anger and disillusionment.


Sooner or later, most corridor conversations in Davos have turned to the US presidential election. It is gradually dawning on people in the Swiss resort that either Mr Trump or Ted Cruz, the Texas senator, will probably win the Republican nomination, and that the “unthinkable” — a Trump or Cruz victory in November’s presidential election — could happen.








Our economics editor Larry Elliott has been coming to Davos for two decades. And he writes that this year’s meeting has been particulary dominated downbeat.


For Justin Welby, mulling over the state of the world in Davos has been easier than the previous week spent trying to hammer out an Anglican church compromise over gay marriage. The Archbishop of Canterbury even cracked one of the better jokes at the World Economic Forum.


Asked whether god is in cyberspace, Welby replied: “I think he must be because every time I am on the underground or a bus I see people looking at their computer or mobile phone saying ‘oh god, why won’t this work’.”


Humour has been in short supply at this year’s Davos. The optimism of a year ago that the global economy was on the up after the deep slump of 2008-09 has disappeared fast….


Here’s the full piece:







So, what have we learned from Davos this year?


In a nutshell, the so-called ‘global elite’ are worried about a range of problems, and struggling to make much progress in solving them.


There’s been no end of talk about refugees, market turmoil, oil, the risk of a new pandemic, and gender inequality. But no real sign that we’re close to a breakthrough on any of it.


As one senior delegate put it, 2016 is going to be a year of shocks.






Top bankers corralled in meetings at Davos



Some delegates might be heading for the ski slopes but there still signs of work being done. It’s all go in the main Congress centre this morning.


We’ve spotted Bank of England governor Mark Carney, Canada’s Prime Minister Justin Trudeau, Tidjane Thiam, chief executive of Credit Suisse and WPP’s Sir Martin Sorrell coming from one direction.


From another direction there’s been a string of top bankers. To name a few: Ana Botín of Santander, António Horta-Osório of Lloyds Banking Group, Bill Winters of Standard Chartered, Axel Webber of UBS and Stuart Gulliver of HSBC.







A drugs scandal has hit Davos this year, in a serious embarrassment for the Swiss authorities.


It’s not the delegates who have been puffing and snorting, though, but a dozen of the soldiers who patrol the ski resorts roads. They’ve been sent home, and may face criminal charges.


The AFP newswire has the details:


Twelve on-duty soldiers had tested positive on Tuesday for cannabis and five of them had also used cocaine, army spokesman Stefan Hofer told the ATS news agency.


The twelve, among some 4,500 soldiers brought in to ensure security at the World Economic Forum this week, had been tested after others in their unit raised the alarm.


Using drug-sniffing dogs, military police had also discovered that one of the soldiers had more than three grammes of cocaine in his possession, according to the report.






Davos, the final act….



Guten Morgen.


Just like the wicked, there’s no rest for the world’s global elite. So world leaders, CEOs, union chiefs, economists and journalists are gathering for the final act of the 2016 World Economic Forum.


There’s a different feel in Davos today. Partly because it’s Saturday, which means this gorgeous ski resort actually has some skiers here today, trudging through the snow alongside delegates.


And partly because after three days discussing the problems of the world economy, everyone’s a bit shattered and ready to go home.


But not before the final big event, a debate on the world economy.



On the panel: UK chancellor George Osborne, Japanese central banker Haruhiko Kuroda, IMF managing director Christine Lagarde, Indian finance minister Arun Jaitley, and Credit Suisse CEO Tidjane Thiam.


It begins in an hour’s time, at 10.30am Davos time or 9.30am UK time.


You should be able to watch it here.


We’ll cover it in this liveblog, along with any other major developments at Davos, and try to work out what (if anything) has been achieved this year….



Updated



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Davos 2016: George Osborne says Google tax deal is a 'major success' - live


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