Former US vice-president Al Gore is speaking about climate change now, saying there are only three questions remaining on the climate crisis:

• Must we change?
  
• Can we change?
  
• Will we change?

Gore than takes a swipe at Donald Trump’s administration, saying:

On the first question, must we change, most people in the world are now convinced; but we are reminded by some recent elections and appointments that not everyone is there.

It’s just been confirmed that 2016 was the hottest year in recorded history, Gore continues, for the third year running.

And he adds that the public are seeing the consequences:

Every night on the television news now is like a nature hike through the Book of Revelations. People are connecting the dots and coming to the realisation that the answer to that first question is yes.

On ‘can we change?’, Gore says the cost of renewable energy is coming down as dramatically as computer chips.

And on ‘will we change?’, Gore says the Paris Agreement is “the most inspiring and greatest accomplishment since the whole negotiating process began”.

It has sent a signal to business, individuals, civil society - that signal has been received and had a dramatic change.

The link between the pound and the FTSE 100 continues to hold. A dip in sterling - partly on profit taking after Tuesday’s gains in the wake of UK prime minister Theresa May’s Brexit speech - has given a lift to the leading index.

The FTSE 100 - which is full of overseas earners who benefit when the pound is weaker - closed up 27.23 points or 0.38% at 7247.61. The pound is currently down 0.8% against the dollar at $1.2304 and 0.5% lower against the euro at €1.1521. Jasper Lawler, senior market analyst at London Capital Group, said:

Trading on the FTSE was muted the day after suffering its biggest loss in six months. The British pound, drifting lower in a correction of its biggest daily gain since 2008, helped the UK equity benchmark to modest gains.

We view the move in the British pound following Prime Minister’s speech as a game-changer and as such don’t anticipate a near-term resumption of the record winning streak for the FTSE 100. UK multinationals, like Burberry, still stand to benefit from a weak pound. The shift in sentiment in the pound means that gains could now be more concentrated in specific companies and industries, rather than the entire UK stock market.

In Europe, Germany’s Dax added 0.51% to 11,599.39 while France’s Cac has closed 0.13% higher at 4853.40.

On Wall Street the Dow Jones Industrial Average is currently 20 points or 0.1% lower.

We just ran into Liam Fox, the UK’s secretary of state for international trade, as he arrived at WEF.

Fox says he’s at Davos make the the case for free trade, and make sure that global markets don’t “silt up”.

He’s also here to support Theresa May, who gives a special address to Davos on Thursday morning.

Pierre Moscovici, the EU commissioner for the economy, is speaking at a session on The European Disunion.

He admits that people are not happy.

“People suffer from too weak growth, too high unemployment and too much debt. There’s economic anger and cultural anger.”

But he insists that the “EU is solid and a unique model”.

The three things Europe needs are economic efficiency, to protect its citizens, and to be more democratic and accountability.

Guy Standing, professor at the School of Oriental and African Studies (SOAS) <corrected> has been telling Davos that the time has come for a universal income for all citizens.

Standing says he has been making the case for a basic income to be paid to everyone regardless of whether they are rich or poor for many years but the idea has recently started to get attention because of the fears of job losses from automation.

“A basic income is not a panacea but it is part of the new redistribution we should be building for the 21st Century.”

Standing says there are three arguments for a basic income: social justice, freeing people from those wielding arbitrary power, and the provision of basic security.He says a basic income is easily affordable and could be paid for by taking the proceeds of “rentier capitalism.

“The returns to property and intellectual property and natural resources are going to a minority and we must do something about that.”

Standing bemoans the fact that Britain did not use its oil revenues during the North Sea boom to set up a sovereign wealth fund.

“Had Britain set up a sovereign wealth fund, as Norway did, it could be paying out more than a basic income”, he said.

In one of those ‘only at Davos’ moments, 17 Pokémon Go “Pokéstops” have been set up around the ski resort to (possibly) raise awareness of inequality.

It’s the brainchild of film director Richard Curtis’s development agency, called Project Everyone. Stops include worthy causes like “Zero Hunger” and “Good Health.”

According to Business Insider, Olympic medal-winning sprinter Michael Johnson and celebrity chef Jamie Oliver have been spotted playing the game. Curtis is hoping that others follow suit, saying:

“I’m hoping a surprising number might think it is quite an amusing thing to do. I’ve noticed the Davos audience are quite willing to laugh at even quite weak jokes, because they’re looking for entertainment!”

Just be careful on those icy pavements...

Away from Davos for a moment once more, and US consumer prices rose in December, up 2.1% year on year mainly due to higher fuel prices as crude recovered more ground from its recent lows.

That was the biggest year on year gain since the middle of 2014 and rose from a figure of 1.7% in November, although it was in line with analysts’ expectations.

The month on month figure showed a rise of 0.3% in the consumer price index, compared to 0.2% in November.

With price pressures increasing - especially if Donald Trump follows through with his promises to boost spending - the chances of a US rate hike are also rising. When the Federal Reserve increased rates in December, it predicted three more rises this year.

James Knightley, senior economist at ING Bank, said:

Both headline and core inflation are rising faster than 2% year on year, helping to build the case for further Fed rate hikes.

US consumer price inflation came in exactly in line for December with the headline rate rising 0.3% month on month leading to an annual inflation rate of 2.1% versus 1.7% in November. The core (ex food and energy) rose 0.2% month on month leaving the annual rate at 2.2% versus 2.1% previously. This is the first time that both headline and core US inflation is rising at 2% or more since the second quarter of 2014.

Fuel prices were the main culprit with energy prices rising 1.5% month on month and transportation costs increasing 1% month on month. Most other components rose 0.2% or 0.3% but there was some softness in food (flat on the month) and apparel (-0.7% month on month).

With headline inflation likely to move up towards 2.5% in the second half of the year and President Trump promising pro-growth and pro-job policies in what already is a fairly strong story, it means further Federal Reserve rate hikes are not far away. We expect the next one in March with a further move higher in the third quarter of 2017.

Europe needs to spend more on defence to protect the Transatlantic Alliance, says Germany’s defence minister.

Ursula von der Leyen told a panel that:

Europe has to take a fair share of the burden. It’s not at that point that now, so we have to invest more in defence.

We want a strong European pillar within Nato, she continues, and the ability to tackle more problems in Africa.

Nato’s future bas been cast into doubt by Donald Trump; von der Leyen see a bright future, though.

I’m very confident that this wonderful and precious friendship will last long.

Von der Leyen says the Alliance between the US and Europe goes beyond military issues; it is based on a long period of friendship and trust, and shared values:

We are fighting for something — for democracy, for the open society, the rule of law.

Frederick Pempe, CEO of The Atlantic Council, agrees, saying that he’s caution against seeing the ‘death knell’ of the Transatlantic Alliance.

Currently, the US spends $600bn per year on military spending, while European countries spend $300bn.

Despite the gloom in the global economy, is there a ‘positive narrative’ out there?

On a panel session in the main hall (livefeed here), documentary maker Sharmeen Obaid- Chinoy says technology is giving people more control.

People want to take ownership of their stories, especially young people.

There are a lot of anxieties. Violence against women in many parts of the world has gone up, but so has access to technology and women are now more aware of their rights.

Young people are now beginning to break free. Their anxieties focus on if they’ll have the same opportunities as their grandparents. Will they be told what do by the leaders in their countries, or will they break through?

I see less anxiety in the places I work, and more hope.

Christine Lagarde, head of the IMF, says that there needs to be a better discussion about the impact that technology has on jobs.

Meg Whitman of HP is blunter, saying that “some of the chickens have come home to roost”.

That includes:

• Declining trust in institutions
  
• Economic dislocation leading to the refugee crisis
  
• Economic dislocation caused by technology.
  

And technology will only have a bigger impact, she warns, as AI, robotics and 3D printing all develop.

So “we need to create a new narrative”, Whitman adds, based on the right thing for the economy, and giving more hope to people who have been dislocated by technology.

Mike Gregoire, the chief executive of software giant CA Technologies, has criticised the idea that simply taxing the 1% richest more will solve our economic problems.

Speaking to me at Davos, he says the key is to invest more in science, technology, engineering and mathematics skills, to help people in the new economy (a theme Joe Biden touched on in his speech too).

Gregoire says:

The lack of both business and governments, and I say both, focusing on retraining people in STEM education for the jobs of the future, rather than trying to protect a job of the past, needs a lot more work.

The notion of this 1% - it’s a very convenient argument. The math doesn’t work.

If you want to talk about taxpayers - I’m a 60% taxpayer, and my company is a 30% taxpayer. If you charge every company and every person, you can’t tax them enough that it would make a difference if you haven’t attacked the fundamental problem.

The fundamental problem is that the economy is changing, and the value curve is changing, and the skill sets are changing, and that’s what we should focus our attention on.

Gregoire adds that modern manufacturing is much cleaner than in the past, has fewer people and it’s highly automated - and that automation will increase.

So what are you doing to prepare people for that economy, rather than the economy of the past?

CA supports several organisations that promote STEM skills, including Tech Girls Rock. Gregoire is also a board member of Npower, which helps minorities develop the skills to get a tech job.

Gregoire explains why this is important:

We’re talking about a whole generation of folks who could add value to our economy, and they just don’t have the skills because they haven’t been trained to be able to participate.

That’s something we can all help lean into.

London mayor Sadiq Khan is in Davos today, as part of his push to protect the capital, and its financial centre, from harm from Britain’s exit from the EU.

He’s holding various meeting, and will also address business leaders tonight at a Morgan Stanley dinner.

According to his office, he will say:

“Securing privileged access to the single market must be the top priority for the negotiations. It’s critical for London. Nothing else will do. It can’t be brushed aside – as it was yesterday.

“A hard-line approach to Brexit ……. could rip Britain apart.

“And if we continue on this path - towards a ‘Hard Brexit’ – we risk having to explain to future generations why we knowingly put their economy, their prosperity and their place on the world stage in such peril.”

Biden ends his final speech as US vice-president with a rousing call for Europe and the US to “lead the fight” to defend the values that created today’s world.

That means:

A fight for democracy, a fight to reject isolationism and protectionism”.

Quite a way to bow out of office.

Biden then turns to geopolitics, and singles out Russia.

Under president Putin, Russia has been testing the fault lines in other nations, says Biden. It is trying to return to a world of ‘spheres of influences’, even sending ‘little green men’ across borders to stir up separatism in Ukraine.

And he insists that Nato’s ‘sacred’ commitment to defend each other from attacks can never be questioned (a nudge towards Donald Trump, who has suggested the alliance is obsolete)

Looking into his audience of global leaders in Davos, Biden says a “progressive tax system” where everyone pays a fair share will help address the crisis.

And he appeals to their better nature, saying:

I told a group of you last night - the top 1%’s not carrying their weight

You’re not bad guys, you’re good guys.

If you speak to the public and ask if they’d rather have free college education, or a raise - they’d take the free college education, Biden continues.

Biden also says that people also need “continuing education” through their lives to help them adjust to technology change, and we must ensure basic protections for workers.

Millions of people around the world have benefitted from globalisation and new technology, Biden continues.

But in other places, factories are closing and jobs are being lost.

Taken together, these forces are effectively hollowing out the middle-class, the traditional engine of economic growth and social stability in Western nations.

We cannot undo the changes that technology has wrought in our world, nor should we try.

But we can and we must take action to mitigate the economic trends that are stoking unrest in so many advanced economies and undermining people’s basic sense of dignity.

Biden begins by telling that there is “palpable uncertainty about the state of the world.”

And he doesn’t mean the transfer of power in America this week.

In two days there will be a new president of the United States...

<boo> calls out one delegate.

No, Biden replies.

The challenges we face, and the choices we must make as an international community doesn’t hinge exclusively on Washington’s leadership.

Whether we reinforce the ties that bind us or whether we unravel under the current pressure. These choices must be made by very single nation.

Davos delegates have flooding into the main hall here to watch the set-piece event of the morning, vice-president Joe Biden’s final speech in office.

Biden gets a warm, standing ovation as he arrives on stage.

And he gets a second round of applause as he introduces himself as “vice-president for the next 48 hours, and after that I’ll be able to say what I really think”.

You can watch it live here:

The number of people in work in the UK dipped slightly in the three months to November compared to the previous quarter, but average weekly earnings came in higher than expected and the claimant count for December fell by more than forecast.

The jobless rate for the three months held at an 11 year low of 4.8%, in line with forecasts, and unemployment fell from 1.65m to 1.6m. But the number of people in work fell by 9,000 to just over 31.8m. This is the second report in a row to show a dip in the number of people in work, perhaps suggesting a slight degree of reluctance among employers in the wake of the Brexit vote.

Average weekly earnings including bonuses rose from 2.6% to 2.8% compared to expectations of a figure of 2.6%. The number of people claiming unemployment benefits fell by 10,100 in December after rising by 1,300 in the previous month. Analysts had expected a rise of 5,000 in the claimant figures.

Naeem Aslam, chief market analyst at ThinkMarkets UK, said:

We had another set of promising economic data today which has shown that average earnings have increased and unemployment claims have fallen. It was important that the average earning index picks up pace to keep up with inflation.

The inflation data released earlier has already brought headache for the MPC members and it is not a good news for consumers because their purchase power is going to see a dramatic impact. Households will have to dig deeper in their pockets and if their earnings do not match inflation, we have a problem.

Suren Thiru, head of economics at the British Chambers of Commerce, said:

Overall, with employment levels still close to record levels and unemployment continuing to fall, the latest indicators confirm that the UK jobs market remains a major bright spot for the UK economy.

While labour market conditions could soften over the next year as economic growth slows, the high degree of flexibility in the jobs market will help limit the extent of any uptick in unemployment.

Although there was a welcome pick-up in average earnings growth, the gap between wage and price growth is narrowing. If this continues as we expect, real household incomes will be squeezed further, stifling consumer spending, which is a key driver of UK economic growth.

Hedge fund chief Ray Dalio warns that the age of globalisation may be over, as provincialism and nationalism rise.

Larry Summers, though, points out that Dalio won’t suffer -- he’ll manage to position himself in the markets whatever happens.

The people who will be the victims of populist policies are the lower income and middle class people in whose name the policy is offered.

Larry Summers, though, disputes whether concerns over income inequality really explain the crisis in the middle classes.

The US has just elected the world’s biggest example of conspicuous consumption, he says

That is a bizarre manifestation of a concern over inequality.

Many people think “too much is being done for the poor, rather than that too little is being done for the poor”.

Summers argues that the surge in support for populism is due to issues like “national unity and strength”, not just envy over wealth.

Lagarde reveals that she felt a backlash from economists, including in the IMF, after she warned about rising inequality in 2013.

Policymakers need to get the signal now, and really think about how to address the public discontent.

That means fiscal and structural reforms, and effective monetary policies, but it also includes redistributing wealth better, the IMF chief says:

It needs to be granular, it needs to be regional, it needs to be focused on what will people get out of it.

It probably includes more redistibution than we have in place at the moment.

Speaking of things that make people angry...

Good morning from Davos, where the second day of the World Economic Forum is getting underway.

Today, some of the world’s richest and most powerful people will be discussing why the rest of the population are increasingly angry and disillusioned with the state of the world.

The managing director of the International Monetary Fund, Christine Lagarde, will ponder how to fix the middle class crisis, alongside Italian finance minister Pier Carlo Padoan and Harvard professor Larry Summers.

Plus, (this is Davos after all) a billionaire! Ray Dalio, founder of hedge fund Bridgewater Associates, will also chip in.

Hopefully we’ll get some decent ideas on how to boost employment prospects and income growth.

After yesterday’s focus on globalisation, potential trade wars and president Trump, today will also focus on climate change.

A group of scientists has set up an Arctic base camp in Davos, to highlight the dangers of climate change and the warming ice caps. And we salute them for sleeping out in tents last night -- when it was minus 16 degrees C.

Europe is also on the agenda, with panel sessions on Brexit, the European Union, and the Transatlantic Alliance.

There’s also going to be a scrum to see Joe Biden address delegates, on his final overseas trip as vice-president.

Here’s some of the key events today:

• 9am Davos time/8am GMT: Panel: How to fix the middle-class crisis
  
• 10am/9am GMT: Arctic basecamp press conference
• 10.30am/9.30am GMT: Special address by Joe Biden
  
• 1.45pm/12.45pm GMT: Is the Transatlantic Alliance at a tipping point?
  
• 2.45pm/1.45pm Fixing European disunion
  
• 5pm/4pm GMT: How to accelerate the fight against climate change, with Al Gore