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EU debt crisis dominates Davos meet

Davos, January 30, 2012

Europe's crippling debt crisis dominated the five-day World Economic Forum, but for the first time growing inequality between haves and have-nots became an issue, thanks to Arab Spring uprisings, Occupy movement and other protests around the globe.

The mood at the end of the world's foremost gathering of business and political leaders in Davos was somber, and more than 2,500 VIPs headed home yesterday concerned about what lies ahead in 2012.

Despite some guarded optimism about Europe's latest attempts to stem the euro zone crisis, fears remain that turmoil could return and spill over to the rest of the world.

And there were no answers to the widening inequality gap, but a mounting realisation that economic growth must include the poor, that job creation is critical, and that affordable food, housing, health care and education need to part of any solution.

Asia is expected to remain the engine for global growth though at a slower rate, with China leading the way at more than 8pc, followed by India and Indonesia.

IMF Managing Director Christine Lagarde warned that the euro zone crisis is not the region's problem alone. "It's a crisis that could have collateral effects, spillover effects, around the world," she said.

"What I have seen, and what the IMF has seen in numbers and forecasts, is that no country is immune and everybody has an interest in making sure that this crisis is resolved adequately."

At a closing panel, Paul Polman, Unilever chief executive said a readjustment in Europe is essential "because, if you want to really simplify it, we've lived above our means, and we've done that for too long, and the moment of truth has arrived."

Citi chief executive Vikran Pandit said the euro crisis "is costing us about 1pc in GDP around the world. You do the math. You do the math and say: 'How many jobs is that? How many people are not working because of that? What can we do to go after the biggest question we've got for this decade which is jobs?'"

The world needs 400 million new jobs between now and the end of the decade, not counting the 200m needed just to get back to full employment, so "that should be our number one priority," he said.

When the forum opened, its normally upbeat founder Klaus Schwab said he remained a deep believer in free markets but that capitalism is out of whack and needs to be fixed "to serve society."

He welcomed critics' ideas of how to fix it - including from the Occupy protesters, though they walked out of a side event where a representative had been invited to talk.




Tags: World Economic Forum | EU | Summit | Davos | Debt crisis |

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