Time to wrap up.

China’s economy has posted its slowest growth in 18 months, prompting the People’s Bank of China to cut a key lending rate for the first time since the early months of the pandemic.

GDP in China expanded by 4% year-on-year in the last quarter of 2021, taking the shine off 8.1% growth in the whole year. Economists said that the domestic economy was suffering from the ongoing pandemic, and the credit crunch in its property sector, with retail spending weakening in December.

The World Economic Forum’s virtual Davos has begun, after the Annual Meeting was delayed due to the pandemic.

China’s Xi Jinping warned that inflation was a growing risk, and expressed fears of economic pain if advanced economies hiked interest rates.

If major economies slam on the brakes or take a U-turn in the monetary policies, there would be serious negative spillovers.”

President Xi also warned of disastrous consequences from a Cold War mentality, at a time when tensions are rising with the West over Tiawan, and threats to national security.

India’s prime minister, Narendra Modi, called for global action on tackling cryptocurrency problems, along with supply chain issues, climate, and inflation.

UN secretary-general António Guterres said that inequality over vaccine rollouts, and an unfair global financial system, was hurting the recovery.

Anthony Fauci, chief medical advisor to President Biden, warned virtual Davos that disinformation spread through social media is undermining the battle against Covid-19.

The online-only event also heard that Moderna hopes to rollout a combined vaccine for flu and Covid-19 by autumn 2023.

Oxfam reported that the 10 richest men in the world have seen their global wealth double to $1.5tn (£1.01tn) since the start of the global pandemic following a surge in share and property prices that has widened the gap between rich and poor.

In the City, the FTSE 100 closed at a two-year high....

.. but Unilever slumped by 7% after seeing its £50bn approach to buy GSK’s consumer healthcare operation rejected.

The chairman of Credit Suisse, António Horta-Osório, has resigned after the Swiss bank found that he had broken Covid-19 quarantine laws, with attendance at the Wimbledon tennis tournament thought to be among the allegations.

Here are the other main stories today:

Goodnight. GW

Back at virtual Davos, UN secretary-general António Guterres has challenged business leaders to:

1. Drive equity and fairness
2. Reform the global financial system
3. Support real climate action

In a special address, Guterres warns that:

The world is emerging from depths of a paralysing economic crisis, but the recovery remains fragile and uneven, amid the lingering pandemic, persistent labour market challenges, ongoing supply chain disruption, rising inflation and looming debt traps, and the geopolitical divide.

He warns that global vaccination rates are falling behind the UN’s targets (which will increase the risk of new variants), saying:

Vaccination rates in high-income countries are, shamefully, seven times higher than in African countries. We need vaccine equity now.

Guterres adds we must prepare for the next pandemic by improving early warning and rapid response plans, strengthening the World Health Organisation, and bolstering local primary healthcare.

Guterres warns that the global financial system should be reformed to work for all countries.

At this critical moment we are setting in stone a lopsided recovery.

Eight out of 10 recovery dollars are being spend in advanced economies, he says, meaning developing countries are at a huge disadvantage, as they experience their slowest growth in a generation.

Emerging economies are suffering higher interest rates and soaring energy and food bills, Guterres says, calling for urgent reforms on debt restructuring

And on the climate emergency, Guterres warns that global emissions are set to soar over levels that would keep global warming within 1.5 degrees:

The UK’s blue-chip share index has closed at its highest levels since January 2020, as China’s move to stimulate its slowing economy boosted markets.

The FTSE 100 index ended the day 68 points higher at 7611 points, up 0.9% today, as it continues to recover from the shock of the pandemic.

It has now gained 3% since the start of this year, after finally recovering its losses since the February 2020 crash.

Housebuilder Taylor Wimpey ended the day as the top riser, up 4.2%, after reporting a strong order book for this year and confirming it plans a share buyback plan.

GlaxoSmithKline closed 4% higher, after rejecting a £50bn offer for its consumer healthcare arm from Unilever -- which fell 7% after its failed bid raised questions over its strategy.

Copper producer Antofagasta (+4.2%), commercial property developer Land Securities (+3.2%), pharmaceuticals group AstraZeneca (+2.6%), and consumer goods maker Reckitt Benckiser (+3.2%) were also in the risers.

China’s move to ease monetary policy today, as growth slowed in the last quarter of 2021, gave markets a lift.

David Madden, analyst at Equiti Capital, says:

Stocks in Europe are up on the session as The People’s Bank of China cut the borrowing cost on 700-billion-yuan worth of one-year medium-term lending facility loans to 2.85%. The move by the Chinese central bank comes as it was confirmed the Chinese economy expanded by 4% in the last quarter of 2021, which was a drop off from the 4.9% growth registered in the preceding three months. It was the weakest quarterly growth reading in 18 months. Countries around the world are largely experiencing a cooling in their growth as the post pandemic boom is running out of steam, but it is worth noting that China was already moving down a gear before the pandemic struck. The latest retail sales data from China were disappointing too as the report came in at 1.7% - the lowest in 15 months – it speaks to dwindling consumer appetite.

The FTSE 100 traded above 7600 for the first time in nearly two years. The London market is enjoying a broad rally as banks, construction, energy, pharma and tobacco stocks are up on the day. It is a similar situation in the eurozone as the DAX and the CAC are showing solid gains too. The New York Stock Exchange remains closed today as the US celebrates Martin Luther King Day. Volatility is low as many Americans are on holiday.

India’s PM Narendra Modi went on to call for a collective global approach to issues facing the world - including supply chain disruption, inflation, and climate change.

He also singles out cryptocurrency as another area where collective, synchronised action is needed, telling the Davos Agenda that:

Given the sort of technology this is based on, decisions taken by any one country are not going to be enough to resolve challenges related to it.

We need to adopt a uniform approach to it.

Late last year, it emerged that India was preparing a bill to regulate cryptocurrencies, which could ban the use of cryptocurrencies as a method of payment in India, and also allow the country’s central bank to launch an official digital currency.

Modi also calls on democratic nations to reform the world’s multinational organisations, so they are better suited to tackling today’s challenges.

Given the global landscape today, the question that also arises, is whether multilateral organisations are able to address the new world order, and new challenges.

When these institutions were created, the situation was quite different.

Today, circumstances have changed, they are very different.

India’s prime minister Narendra Modi says it is the best time to invest in India, and that the country has given the world a ‘bouquet of hope’.

In a special address to the World Economic Forum, Modi says India wants to become a trusted partner to the world in global supply chains, and is in talks with many countries to agree free trade deals.

Modi cites India’s commitment to deep economic reforms, and the $1.3trn it is investing in digital connectivity infrastructure.

He also points to its pharmaceuticals industry which produced many vaccine doses to fight the pandemic, describing India as ‘pharmacy to the world’, and also its growth in start-ups.

Moderna’s chief executive has predicted that a combined booster shot for Covid-19 and flu could be available, in some countries, by the autumn of 2023.

Stéphane Bancel told the panel session at the World Economic Forum’s Davos Agenda that his company is aiming to create a single annual booster.

Bancel explained that:

“Our goal is to be able to have a single annual booster so that we don’t have compliance issues where people don’t want to get two to three shots a winter,”

Instead, they would get one dose which included “a booster for corona, and a booster for flu and RSV (Respiratory syncytial virus) to make sure that people get their vaccines”, Bancel explained.

Q: So how close are we to a vaccine that offers protection against Covid-19 and also flu?

The ‘best case scenario’ is that this combined vaccine would be available in the “fall of ‘23”, Bancel replied.

He cautions that it wouldn’t be available in all countries, but could be available in some countries.

China has warned the US and Europe against a rapid rise in interest rates that would “slam on the brakes” of the global recovery from the pandemic.

Central banks should maintain the monetary stimulus or risk “serious economic consequences” from the spillover effects with developing markets bearing the brunt.

In a virtual speech to open the World Economic Forum’s Davos Agenda, the Chinese president, Xi Jinping, said that while global inflation risks were emerging, policymakers should strengthen economic policy coordination and develop policies to prevent the world economy from dipping again.

“We must do everything necessary to clear the shadow of the pandemic and boost economic and social recovery and development,” he said.

“If major economies slam on the brakes or make major U-turns in their monetary policies there will be serious negative spillovers. They would present challenges to global and economic financial stability and developing countries would bear the brunt.”

Anthony Fauci, chief medical advisor to the President of United States, has warned virtual Davos that disinformation is undermining the battle against Covid-19.

In a World Economic Forum session on the pandemic, Fauci explains that the entire world is facing this disinformation, including in “a very, very disconcerting way in the US”.

It is accompanying a problem where everyone should be pulling together against a common enemy, namely the virus, Fauci explains.

Fauci warned that:

We have disinformation that is entirely destructive to a comprehensive public health endeavour.

I’m not sure how we’re going to counter that, except by getting out as much correct information as we possibly can, and use the social media in a positive way, as opposed to in the somewhat destructive way that it is being used right now.

Fauci also explains that it is too early to say when Covid-19 will become endemic. He says Covid-19 will not be eradicated - pointing out that smallpox is the only infectious disease to be eradicated in man.

But Covid-19 could be controlled - meaning it is present at a level that does not disrupt society.

Fauci also explains that the long-term goal is to develop vaccines that target a commonality among all the real and potential variants, rather than getting into a “whack-a-mole” approach of boosters to every future variant that emerges.

Moderna’s CEO, Stéphane Bancel, explained that scientists are working out how the vaccine should be adjusted for the autumn of 2022:

Annelies Wilder-Smith, professor of emerging infectious diseases at London School of Hygiene and Tropical Medicine, warned there is a ‘high probability’ that we will have another variant.

Wilder-Smith says:

The question is where, and when, and will it be more or less dangerous than the current variants of concern.

High virus circulation drives the risk of new variants, she explains.

But the hope is that future variants will not become more dangerous. It is likely that the virus will attenuate, so it has high transmissibility but causes less serious disease, Wilder-Smith added.

The outlook for jobs globally this year has worsened markedly since last spring as new variants of the Covid-19 virus have slowed growth and restricted hiring, according to a report from the International Labour Organisation.

In its latest assessment of the state of the labour market, the Geneva-based ILO said unemployment would remain above 2019 levels until at least 2023 and the damage caused by the pandemic would take years to repair.

The ILO said its latest estimates showed there would be the equivalent of 52m fewer jobs globally in 2022 than in the last quarter of 2019, the period immediately before the pandemic struck.

That represents a doubling from the 26m in the organisation’s last labour market update in May 2021.

According to the report, global unemployment will be 207m, a smaller drop from the 214m in 2021 than previously expected and well above the 186m reported in 2019. The ILO said the impact of the pandemic on employment was “significantly” greater than the raw figures suggested, because many people had left the labour force entirely.

More here:

President Xi insisted during his Davos speech that globalisation is the trend of our times, comparing it to a river that may face counter-currents, but can’t be stopped from reaching the sea.

And he warned that a ‘cold war mentality’ must be discarded, saying:

We need to discard cold war mentality and seek peaceful co-existence and win-win outcomes.

The world today is far from tranquil, Xi adds, warning of ‘rhetoric that stokes hatred and prejudice’.

He says acts of containment, suppression or confrontation arising from this cause harm to world peace and security, warning:

History has proved time and again that confrontation does not solve problems, it only invites catastrophic consequences.

Xi then adds that “protectionism and unilateralism” ultimately hurt both sides, and that “hegemony and bullying” run against the tides of history.

Tensions between China and the West have been rising in recent months, with Australia, the UK and US creating a three-way strategic defence alliance called Aukus, and rising concerns that China could invade Taiwan.

Xi also criticises “overstretching the concept of national security” to hold back economic and technological advances.

[Both the UK and the US have been active on this. The US communications regulator has voted to revoke China Telecom’s licence in America last year, while the UK has been looking to create a new funding model for nuclear power stations to shut out Chinese companies.]

President Xi also insists that China’s ‘overall momentum’ remains sound, after today’s GDP data showed that gross domestic product grew by around 8% year on year in 2021.

We have every confidence in the future of China’s economy, Xi tells virtual Davos.

He adds that it will continue with its economic reforms and the opening up of its economy.

Xi also says China will let the market play a decisive role in allocating resources, and that all types of capital are welcome, if they comply with laws.

Beijing has been cracking down on its technology sector, which prompted Yahoo to pull out of China last November.

Xi Jinping, President of the People’s Republic of China, has warned that global inflation risks are emerging, and urged countries to strengthen economic policy coordination to prevent the world economy from dipping again.

In a virtual speech to open the World Economic Forum’s Davos Agenda, Xi warns that that emerging markets could suffer if central banks tighten monetary policy to tackle inflation.

He also called for world leaders to continue to embrace cooperation to defeat the pandemic.

Xi explains that the world is undergoing major changes, and that the global economy faces many constraints - such as ongoing supply chain disruption and a tight energy market.

The global low inflation environment has changed, Xi says, with inflation risks emerging.

And he warns that there could be serious spillovers if major economies apply the brakes to monetary policy (by raising interest rates and ending stimulus measures).

That would create challenges to economic and financial stability, Xi warns, with developing markets bearing the brunt.

Update: Xi says:

If major economies slam on the brakes, or take a u-turn in their monetary policies, there will be serious negative spillovers.

They would present challenges to global economic and financial stability, and developing countries would bear the brunt of it.

Xi also says the international community has fought a courageous battle against the pandemic - comparing the response to one gigantic ship riding out a storm, where a collection of small boats would not have survived.

He also says the pandemic continues to pose a serious threat to people’s safety and health - strong confidence and cooperation is the only way to respond, rather than holding each other back or assigning blame.

Economists and researchers at the NIESR thinktank are to stage a two-week strike in a row over two years of below inflation pay offers, the Unite union has announced.

The strike is set to begin this coming Friday, and run to Friday 4 February.

NIESR employees held a strike ballot after being offered a basic pay deal worth 2% this year, after wages were frozen last year.

That’s sharply below UK inflation, with the consumer prices index hitting 5.1% in November and RPI inflation running at 7.1%. NIESR’s staff were understandably unhappy about being offered a real terms pay cut, and have voted to walk out.

As our economics correspondent Richard Partington reported out last month:

Asking workers to stomach a below-inflation pay rise is never popular. Asking them to do so when their day job is forecasting the cost of living is really asking for trouble.

The action means that there is a very real possibility that NIESR’s forthcoming forecasts for the UK and global economies, which have been published quarterly since the 1980s, will not go ahead, says Unite.

Unite regional officer, Peter Storey says the walkout can be avoided, if NIESR’s management improve their offer.

“Unite is committed to reaching an agreement with the NIESR but the Institute needs to improve its pay offer. Morale is at an all-time low, so it’s high time for management to recognise the contribution NIESR’s staff have made to the Institute’s success through difficult times.

”The strike will disrupt a number of research contracts and forecasts for the UK and the global economy. We urge management to join Unite in talks this week and avoid this dispute.”

The chairman of Credit Suisse, António Horta-Osório, has resigned after the Swiss bank reportedly found that he had broken Covid-19 quarantine laws, including by attending the Wimbledon tennis tournament, my colleague Jasper Jolly writes.

Horta-Osório, the former chief executive of Lloyds Banking Group, said in a statement that his “personal actions” had made it more difficult for him to represent the bank. He had also admitted breaking Swiss quarantine rules.

It means that Horta-Osório managed less than a year in the job, after he was brought in to steady the bank after a series of expensive failures, including its involvement in the collapse of Archegos, an investment company, and Greensill Capital, a supply chain finance firm.

Horta-Osório said in a statement issued by Credit Suisse on Monday.

“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally.

“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time.”

The breach emerged in December, after Reuters reported it was discovered through a preliminary investigation by Credit Suisse’s legal team. The news came just weeks after Horta-Osório admitted that he breached Covid rules in Switzerland, having flown out of the country within three days of arriving on 28 November despite being required to quarantine for 10 days.

Credit Suisse confirmed on Monday that Horta-Osório had resigned after an investigation commissioned by the board, but did not give any details of the findings.

More here:

The number of households suffering from “fuel stress” – those spending at least 10% of their family budgets on energy bills – is set to treble to 6.3m overnight when the new energy price cap comes in on 1 April, according to a leading research group.

Fuel stress will no longer be confined to the poorest households, according to a study by the Resolution Foundation. Low- and middle-income families will also find it hard to cope as they spend a far greater share of their family budget on these essentials than higher earners.

The forecast will add to calls for the government to take action to avert a cost-of-living catastrophe after global energy market prices surged to record levels.

The research shows 9% of English households are currently experiencing fuel stress, an indicator of finding energy bills unaffordable and also the definition of fuel poverty in Wales, Scotland and Northern Ireland.

That figure is expected to leap to 27% when the energy price cap rises to about £2,000 a year in April, an increase of more than 50%. The energy regulator, Ofgem, will announce the new price cap level on 7 February. More here:

Shares in healthcare company GSK have jumped 5.5% in early trading after it rebuffed a £50bn takeover offer from Unilever for its consumer healthcare venture.

GSK is the top FTSE 100 riser, after it insisted Unilever’s proposals “fundamentally undervalued” the consumer business and its future prospects.

But Unilever is bookending the other end of the FTSE, falling nearly 6%, as analysts predict it would have to make a higher offer to secure the prize - which Unilever insists this morning would be a good fit with its business.

GSK’s consumer arm owns brands including Panadol painkillers, Sensodyne toothpaste, Tums digestive health products, Otrivin and Theraflu respiratory products and Nicorette nicotine replacement therapy

Over the weekend GSK released new, higher organic sales growth forecasts for its consumer health division, which is a joint venture with Pfizer. It is planning to spin it off, and float on the stock market.

GSK says:

The Board of GSK therefore remains focused on executing its proposed demerger of the Consumer Healthcare business, to create a new independent global category-leading consumer company which, subject to approval from shareholders, is on track to be achieved in mid-2022.

Unilever has confirmed that it approached GSK and Pfizer about a potential acquisition of the business, insisting that the deal would make sense, saying:

GSK Consumer Healthcare is a leader in the attractive consumer health space and would be a strong strategic fit as Unilever continues to re-shape its portfolio.

The 10 richest men in the world have seen their global wealth double to $1.5tn (£1.01tn) since the start of the global pandemic following a surge in share and property prices that has widened the gap between rich and poor, according to a report from Oxfam.

Urging governments to impose a one-off 99% wealth tax on Covid-19 windfall gains, the charity said World Bank figures showed 163 million more people had been driven below the poverty line while the super-rich were benefiting from the stimulus provided by governments around the world to mitigate the impact of the virus.

Oxfam projects that by 2030, 3.3 billion people will be living on less than $5.50 per day.

The charity said the incomes of 99% of the world’s population had reduced from March 2020 to October 2021, when Elon Musk, the founder of the electric car company Tesla, and the other nine richest billionaires had been collectively growing wealthier by $1.3bn a day.

Here’s the full story:

Antonio Horta-Osório, who is well-known in the UK following his time running Lloyds Banking Group, says:

“I have worked hard to return Credit Suisse to a successful course, and I am proud of what we have achieved together in my short time at the bank. Credit Suisse’s strategic realignment will provide for a clear focus on strengthening, simplifying and investing for growth. I am convinced that Credit Suisse is well positioned today and on the right track for the future.

I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally.

I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time. I wish my colleagues at Credit Suisse every success for the future.”

Big news in the banking sector this morning: Credit Suisse chairman António Horta-Osório has quit following an internal probe into his personal conduct, following breaches of Covid-19 rules.

Credit Suisse announced that Horta-Osório had resigned after a board investigation, after it emerged he had broken British quarantine rules to attend the Wimbledon tennis finals in London last July.

The Portuguese banker had flown in from Switzerland, which had been on the UK government’s amber list of countries that required arrivals to isolate for 10 days.

Horta-Osório had also admitted breaching Covid rules in Switzerland at the end of November, having flown out of the country within three days of arriving on 28 November, despite being required to quarantine for 10 days.

It’s an embarrassing blow to the embattled lender, which had appointed Horta-Osório less than a year ago.

Credit Suisse incurred heavy losses from the implosion of the Archegos investment fund last year, and also provided funding to the now-collapsed supply chain finance firm Greensill Capital.

Credit Suisse has now appointed board member Axel Lehmann chair, as it tries to recover from this string of scandals.

Severin Schwan, Vice-Chairman and Lead Independent Director of the Board of Credit Suisse, said:

“We respect António’s decision and owe him considerable thanks for his leadership in defining the new strategy, which we will continue to implement over the coming months and years.

Axel Lehmann as the new Chairman, with his extensive international and Swiss industry experience, is ideally suited to drive forward the strategic and cultural transformation of the bank. We wish Axel every success in his new role and António all the best for the future.”

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

China’s economy slowed at the end of last year as the Covid-19 pandemic and the crisis in its property sector hit growth-- prompting Beijing to cut a key interest rate.

China’s GDP expanded by 4% year-on-year in October-December, data from the National Bureau of Statistics shows - which is the weakest expansion in 18 months.

For 2021 as a whole, China’s economy expanded by 8.1% - the fastest in a decade - as it recovered from the slump in activity at the start of 2020.

But there are clear signs of a slowdown at the end of the year, as China’s government introduced new restrictions to combat the latest wave of Covid-19.

Retail sales growth slowing sharply to just 1.7% year-on-year in December, down from 3.9%.

Spillovers from the crisis at indebted property developer Evergrande also weighed on China’s economy.

And in response, China’s central bank has cut its key interest rate for the first time in almost two years to help bolster the economy.

The People’s Bank of China has lowered the rate at which it provides one-year loans to banks by 10 basis points -- the first reduction since April 2020.

Louis Kuijs, head of Asia economics at Oxford Economics, says:

“Consumption remains the weakest link in China’s growth story at the moment and that will by and large continue for much of this year,” said

“We think Beijing has a bottom line of around 5%. As is the case at the moment, if growth is weaker than that, they’d feel strongly motivated to pursue more policy easing.”

China’s president Xi Jinping will be speaking later today, as part of the Davos Agenda series organised by the World Economic Forum (as the usual Annual Meeting has been postponed again due to the pandemic).

We’ll also get the results of Scotland’s largest-ever auction of permits to construct offshore windfarms, which could raise up to £860m.

The agenda:

• 10am GMT: Scottish auction for offshore windfarm permits results
• 10am GMT: Special Address by Xi Jinping, President of the People’s Republic of China, at Davos Agenda
• 11am GMT: ILO publishes new analysis of labour market and social trends, and impact of Covid-19
• 3pm GMT: Special Address by Narendra Modi, Prime Minister of India, at Davos Agenda
• 4.30pm GMT: Special Address by António Guterres, Secretary-General, United Nations, at Davos Agenda