Following are excerpts from a CNBC interview Bob Moritz, Global Chairman of PwC, from the World Economic Forum 2017
GC: Obviously I think from the first two interviews we've done on the program, it's clear that there is a certain amount of concern about what the politics brings us in 2017. Are we going to see CEOs begin to ramp up investment, or will they continue to sit back a little and wait and see which way the politics runs before they commit significant funds? Bob Moritz joins us, of course the Chairman of PwC, good morning to you.
BM: Good morning.
GC: Just pull out the highlights for us, then, what is on CEOs' minds?
BM: It's interesting, you've got a dichotomy, because it doesn't resonate with the viewers out there. You've got CEOs that are actually rising in their confidence, despite those uncertainties. You actually have a high degree of confidence, in the short-term, in the US and the UK irrespective of the election and Brexit, and you actually have CEOs that are trying to understand and connect better with the populace out there in dealing with some of the things that we've seen relevant to the elections on a worldwide basis.
SS: But Bob, these CEOs are paying themselves more money than ever, with all kinds of surveys coming out ahead of this meeting, talking about the eight richest people in the world, equivalent wealth to the poorest half, etc., etc. They're giving themselves more in buy backs, more in pensions, more in dividends, as well. It's one thing saying they're getting the message, it's another thing actually enacting it.
BM: Absolutely, and I think that's the challenge right now that we've seen when we've done this survey, which is, for the first time in the last couple of years, you've actually seen the awareness of the difference between the populace perspective, and we did a survey this year of about 5,000 people, just to get a different point of view to counter the CEOs' mindset. So the awareness is there, the conversations in the boardroom are there. The question is, 'What do I do about this?' So how do I think about policy issues around wage? How do I actually think about engagement with the populace and the communities that I'm operating with, and how can I actually stimulate the job growth? Because that's the big issue, when you look at income inequality, and the disruption has come more so from digitization and technology than it has from policy issues and trade issues right now. And that's the challenge I think both business and government is going to have over the next couple of years.
GC: But when you look at the breakdown, geographically, is there a real, clear difference in who's feeling better about the world?
BM: Yes, surprisingly enough, you actually have an Africa right now that is deteriorating, generally. Three things are happening there. One, the FX rate is going in a different direction. Second is the concern on social unrest, which is a big issue in Africa generally. And third is the availability of skillsets. Everyone else, in terms of regions of the world, are at least trending more positive. The big ah ha moment is actually the fact that the short-term discussion you just had with Sir Martin, actually is pointing to the US to be the biggest upside. Investments in the US from CEOs outside the US is actually at almost a record high level, even better than China right now, and it put some distance between the US and China, which is unheard of when you look at what's happening from a political perspective.
SS: Political storms aplenty in Europe in 2016, we're expecting probably a very similar 2017 as well, which probably means it won't happen, but indeed Europe is actually picking up on the business front, though, isn't it, from your survey?
BM: Absolutely, yes, they're picking up and what you've got is probably a relative game going on right now, compared to where they were a year ago. Now, what's good is if you look at, for example, manufacturing in the UK, with the FX rates the way they are, you've got a lot of people outside saying, 'Hey, that's an opportunity for me to manage the bottom line a little bit differently than before.' You've got a consumer that's still interesting there, and actually outweighs probably the macro trends that people would think about from in India. India's another interesting story coming out of the survey. The CEOs in India? Highest confidence level across the entire world. But outside of India, nobody willing to invest at the relative level that's there, again, because we haven't seen as much momentum in India for what Modi was trying to do over the last couple of years. It's in-, the proof is in the pudding, and I haven't seen it yet to be willing to invest.
GC: Early doors on the Trump administration, but when you look at the policy platform as we know it so far, do you see it improving, in any way, the average working man's quality of life and income?
BM: See, I think right now what you've got is the policies not only from the administration but across the Republican Party, with the control of the Congress, Senate and Whitehouse, there's a confidence level that'll get more certainty around taxation. There's a confidence level from the CEOs around regulation, and that's a willingness to invest. The question's going to be, will it actually create the job growth? Because even if you actually go and sort of monopolize the trade policies, and maybe take care of the globalism versus the nationalism, the digitization and the automation has actually taken away a lot of those jobs in the Midwest. So will the country actually invest in education? Will the country invest in the new jobs and be that center for the world, where in fact the attractiveness will actually grow those kind of jobs? And right now, that's a question mark .
SS: For the working American, I mean, one big failure of Mr. Obama was he failed to get a federal wage higher, as well, I think it's still $7.25. Now, I know it's on a state by state basis, individual corporations have got it higher than that, as well. But that was Obama, who was trying to do it. Mr. Trump isn't going to be trying to, I guess, get the federal minimum wage up, as well, as one of his priorities, as well. So how is the working man, given what you said about digitization, how is he going to benefit from the administration?
BM: Yes, I think that's a real question mark right now, because I think it's really one where the President, at least publically based upon what he's done today, has actually said, 'Okay, let's get the manufacturing back in the country,' versus into Mexico, versus in an Asia, etc., and the question is, can I do that systemically and consistently enough to actually get the upside in the employment that's needed for those that are looking for jobs?
GC: We've got to wrap it up, just very briefly here, worried about Brexit?
BM: Worried about Brexit in the two to three year timeframe? Absolutely. Right now, you've got to focus on the financial services industry as a real concern, in terms of the role that London, in particular, has played over the last couple of years, so that's an issue. And the question's going to be the hard landing or the soft landing, and we'll find out later today, hopefully, in terms of how it will be negotiated.
GC: Bob, pleasure to talk to you, thank you so much for joining us.
BM: Absolutely. Thanks for having me.
GC: Bob Mortiz, joining us from PwC. We'll take a break, we'll be right back, Richard Edelman will be up with us very shortly.