this is bbc news. we'll have the headlines and all the main news stories for you at the top of the hour, straight after this programme. hello everybody, a very warm welcome to talking business with me. let's go and take a look at what is on the show. after another tumultuous year for the global economy, are things going to get any better in 2023? after all, 2022 brought a war in ukraine, a global energy crisis, more trade restrictions, covid's continuation, and a cost of living crisis. so, will the impact of all of that start to ease over the next 12 months?

i'm going to hear what it all means from one of the world's most influential investors, the boss of the world's biggest sovereign wealth fund of the norwegian pension fund that owns about 1.4% of every publicly listed company on the planet. also on the show, after a turbulent few years of pandemic induced losses for the global airline industry, the big boss of the international transport association, there he is, willie walsh, he tells me by 2023 will be the years that once again land at destination profitability. once again, a big hello and a warm welcome to the show. war, virus and energy crisis and a cost of living crisis are just some of the reasons that 2022 has been a year

like no other for the global economy. politicians, policy makers have all tried to steer a path through the choppy waters. but the risks of recession next year remain very real, as millions of us already suffer a squeeze in our living standards. arguably, the biggest shock to the global economy was russia's invasion of ukraine. it unleashed a torrent of economic shocks that have been felt across the planet. the ones that have perhaps been felt the most acutely are the soaring costs of food and energy as supplies. they've just been cut off from the global markets. when you combine that with the pandemic�*s disruption to supply chains, it can be little wonder that inflation is soaring. here's the picture. in the g7 group of advanced economies, many of the world's biggest economies, well, they've seen prices rising at the fastest pace in a0 years. one of the key tools for tackling that, well, it's for central banks to increase interest rates again. here's the picture.

in the g7, it's made borrowing money more expensive and cool down business investments. and if you want to know what it means for big businesses, well, all of the world's major stock markets, they're on course to close their year down as companies worry that profits are falling and the problems that they're not constrained to any one part of the world. in october, the imf, the international monetary fund, cut its expectations for global growth to 3.2% this year and 2.7% in 2023. but now even that might be optimistic. we are concerned that there is a simultaneous slowdown in the us, in europe and in china and in china in particular. the slowdown is very, very significant. so when we look at the picture in 2023, we are going to come up with an update of our growth projections in january.

it has darkened recently. on the basis of what we see in consumer sentiment and investor sentiment. and as we just heard, china has its own problems whose economic implications... they are yet to be fully played out. the world's second biggest economy still has concerns about huge debts in the property market, and it's not clear how the easing of covid restrictions will affect the economy. however, in the year to the end of november, china's exports to the rest of the world were down some 8.7%, and that was the biggest fall since the pandemic began and was certainly a reflection of both low production because of covid restrictions and falling demand from abroad. central banks are faced with a delicate balancing act of fighting inflation and keeping the economy growing at the same time. looking forward. faced with a challenging situation, the advanced economies and emerging market economies need better collaboration on macro

economic policies. that failure to work together has also been reflected in the rise of trade barriers that limit global economic growth. protectionism. decoupling. fragmentation is very disruptive, and that would be very costly. we have actually calculated at the wto that if we break into two trading blocs, it will cost the world a loss in global gdp of 5% in the longer term. this is huge. so the global economy, it faces a delicate balancing act to get through 2023. and if you're in charge of the world's biggest sovereign wealth fund, well, it might give you a bit of a headache as you try to work outjust how you can make that money grow. well, norway's government pension fund global, it's worth around $1.3 trillion, which means

if it was a country, it'd be the 14th biggest economy on the planet. just underneath spain. it controls around 1.4% of all publicly traded shares in the world, which certainly gives it a huge influence as it invests the vast sums that norway's government has accrued from its substantial oil and gas reserves. so i sat down and caught up with its big boss, nicolai tangen. a real pleasure having you on my show. thanks for your time. let's start with this. let's start with the history of the fund that you run. i mean, it's the largest sovereign wealth fund in the world. i mean, it goes back to norway discovering oil. it does. it goes all the way back to 69. and they were on the last well and hadn't found oilfor they'd been trying for many years and then theyjust hit it. so on the like they were drilling and couldn't find it. absolutely. and then the last one they found. absolutely. and the platform guy was asked to wake up the boss 2:00 in the morning and he said, you better have a good reason

for waking me up. and did he? they had just struck ekofisk which was the largest find ever in the history of the world at that stage. wow. and that's where the money comes that goes in that that supports the fund that you run. that's right. and they did the clever thing of putting this into a fund, which they established 26 years ago. and that's gone from the first deposit, which was 2 billion norwegian krona to 12,000 billion today. let's talk about the tumultuous year that we've had, certainly with the global economy, with the horrendous war in ukraine, which has resulted in soaring food and energy costs. we're still dealing with covid. we've got new trade restrictions. i'm just wondering in in your opinion, what's the biggest impact? what keeps you awake at night? the big thing here is the is the risk of inflation being more difficult to tame than what we generally think. and, of course, what's been going on in in ukraine has continued to drive prices up.

and so we've had price increases and inflation also helped by higher energy prices. and so that's been negative and is impacting food prices and prices generally. and so there is a risk that this may be difficult to get back down and that it would be bad for the world economy. and as we all know, economists are widely predicting another challenging year next year, 2023, slowing economic growth, interest rates possibly going even higher. of course, to try and tame inflation. and there is a concern that we'll see recessions and certainly possibly a recession in the world's biggest economy. well, what are the biggest risks that you see out of that picture? well, i think it's a combination of of the risk of continued strong inflation with slow growth, the so called stagflation, because that's typically very negative for for financial markets. and there is a risk that we're seeing that next year. now, the only thing i would say

is that a lot of the economists are actually predicting this, and typically the world panned out differently from what the consensus thinks. and so we shall see. now, of course, the old the old expression that when the. when the us or america sneezes, the rest of the world catches catches a cold and. and that's important to you. i mean, the us is your biggest market. i believe more than 40% of your investments are in the united states and the united states economy is driven by the american shopper. let's be frank, right by the consumer that's also predicted to to slow down. how much of an impact could that have on the global economy? well, it's difficult to quantify it, but clearly it's very, very important. right. and you are right. we have more than 40% of our portfolio invested in in the us. and so clearly the health of the us economy is very, very important. and a lot of that spending in the us over, let's say the 20 to 25 years has been driven by, well, buying cheap stuff out of china. and we've seen beijing with these very tough restrictions, a lot of lockdowns easing, possibly easing, easing. now, how important is this, this new thought coming out of beijing about reducing restrictions in such

an important economy? it's important because it's important for the chinese companies, of course, but is also important for the us companies and the european companies which sell into china. and china is a large market for a lot of the consumer goods companies in the world and the technology companies. so it's a it's an important development. let's talk about the recent comments, a stark warning, actually, from the head of the imf, the international monetary fund, and i'm quoting here globalisation is facing probably the most fiercest challenge since world war two. would you agree with that? and if so, why? no, i think that's very clear. and there are many factors behind this. but one important factor is the technology kind of fight or war between the us and china, which means that there are limits when it

comes to cheap exports and so on. you are seeing less technology transfer. you are seeing the these countries being more suspicious when it comes to to trading and so on. and so that has got implications for for globalisation. and we're seeing a reversal to a certain extent of this. and also the people are seeing the value of producing things closer to home. you know, that's a less risky supply chain. and that is driving also costs to a certain extent. it's more expensive to produce closer to home. it's the horrendous invasion by russia into ukraine. and correct me if i'm wrong here, but the norwegian government has basically told you, right, to flog your investments in russia. and again, correct me if i'm right, but that hasn't been the easiest of tasks. i'm just wondering where where you're at with that? well, it's pretty much impossible because well, there is no real trading taking place in these years. and also because of the sanctions, we must know who we sell to. we cannot sell to people on the sanction list and to to be 100% certain where your equities end up

when you sell them, that we cannot be. and so for the moment, these are frozen. is there more you could do? no, i don't think there is more we can do. if we were to break any sanctions, that would be very, very serious. and there is no way we can transact at this stage without the risk of that happening. so, nikolai, what you're saying is that you're stuck with these russian. that's right. and you're probably not the only one. no, no. we are all stuck, unfortunately. and nikolai, you've been rather outspoken this year on executive pay. and again, if i look at some of the companies, you know, voting against proposals at companies from apple and intel, ibm, harley davidson this year when workers are struggling right to to make ends meet. how important is it that other shareholdersjump onto what you're saying? well, we think it's very, very important. i mean, corporate greed and executive pay have reached levels, which we didn't think was possible. and it's oftentimes not aligned with the performance of the companies themselves. and we also think that in many cases, they are not aligned with our interests

as shareholders. it dilutes the returns that we shareholders get. so it's important that we that we look at these problems together as well as large shareholders. is it reversible, though, do you think? or has the horse already bolted? i mean, i'm not so sure it's necessarily reversible. we need to be very conscious about it, in particular at a time where so many normal people struggle with our incomes. some of your biggest investments are in the big us tech firms, and they've had a bit of a battering this year. if we look at the likes of apple, microsoft, alphabet, amazon meta, the owner of facebook as the man in charge of the fund, how does that make you feel when you see those tech prices tanking a bit? well, hey, i hate to lose money and so that does not feel very good. the same time they have been going up for a long period of time, they have created a lot of wealth for all the investors.

it's in a way a bit natural that some of the share prices come back down after covid, because covid really drove the technological development and the implementation of new technology. so you kind of really expect them to to pause a bit. but hey, we don't like to lose money and we have big positions in all of these companies are their best days behind them. if you look at the problems they're facing, i think time will tell. well, you've got to drop in advertising revenue. you've got the tighter regulation on both sides of the atlantic. absolutely. at the same time, some of them have very strong positions. so i think it depends. they're sitting on a lot of moneyjust well, they're sitting on money. they have strong products. they've got strong market positions. so i think time will telljust what will happen there. yourfund does make a virtue of considering environmental and social issues. yeah. when you pick your investments. that's a fair thing to say. so given the losses that you're seeing at the moment, are these going to have to take a back seat or do you think

all this isjust temporary at the moment? no, i think you know, i think it's extremely important to continue to have the environmental and social responsibility in your mind when you make investments. and what we typically see is when share prices go down, some investors spend less time and effort on this. we think it's important really, really to stay the course. it's more important than ever to work with the companies on the climate efforts to make sure they have credible plans, that they live up to the kind of expectations we have to them when it comes to being a responsible company. and do you think companies can still afford going down this path, given everything else they're dealing with? is that a lot of money that they need to? absolutely. that you cannot afford not to go down that route, because if you are now, let's say, a company which pollutes you will have nobody working for you. nobody will want to buy your products. you would not get a loan in the bank and you will not get insurance. you basically don't have a business if it's not sustainable. let me end on this. we have a very small,

amazing team that puts this show together every week. huge responsibility on our shoulders, but we or i certainly don't run the world's largest sovereign investment fund. on a personal level, what is that like? well, it's a lot of responsibility. a lot of people in norway are really, really interested in this. so they ask me all kinds of questions when i meet them, whether it's out in the forest or at the restaurant or whatever they are, really, really — they love that fund. and now it's a big responsibility. but you love it. but i love it. you do love it. 0k. on that note, nicola tango, a real pleasure having you on my show. thanks for your time. thank you. good luck with everything. aviation is hugely important to the global economy carrying both people and high value goods across the planet. in fact, before the pandemic, it was worth about 4% of the entire global economy. however, over the last three years it lost some $200 billion because of the pandemic. but with all the turbulence, the global economy is suffering, can it finally get back on course for a profit next

year? well, i've been speaking to the head of the airline's trade body, its iata, the international air transport association. willie walsh. always a pleasure having you on the show. thanks for your time. and willie, let's start well, let's start with your 2023 forecast, next year's forecast. i mean, you're optimistic the industry will return to profit, a modest profit, but a profit nonetheless. but here's the problem. i think given the 2023 picture, soaring inflation, higher interest rates, so it's more expensive to borrow money, an energy crisis, a cost of living crisis and a continued war on european soil. willie, are airlines feeling resilient enough to get through all of that? i think it's all relative. you know, given where we've come from, next year looks an awful lot better than last year did. so from that point of view, we are forecasting a very small profit at a global level. you know, we're still looking globally and this is the global picture we're talking about at gdp growth ofjust

over 1%, about 1.3%. now, a significant slowdown from where we are or where we were. but yeah, i think some of the challenges you outlined, i would describe them as business as usual challenges, certainly compared to what we've come through during the depths of the pandemic crisis. but even if you just look at energy crisis and cost of living crisis, i mean, surely, surely will be they're headwinds that could tip these expected profits possibly back into to losses? well, you've got to realise that for the airline industry, energy costs have been significantly elevated in 2022, particularly the price of jet fuel. so, you know, we actually expect our fuel prices to come down slightly next year, not to increase. so i think the headwind of fuel and energy that really hit us in 2022. now, it may have an impact on consumer demand, but we're not seeing evidence of that at the moment. willie, you've often been

critical of airports hiking the fees that they charge the airlines. and you've cited this is one of the issues affecting airlines return to profitability. but, you know, willie, some critics will say that airports, they are facing their own inflationary pressures. any sympathy at all for the tough environment in which airports are operating? zero. zero sympathy because it's not as simple as that. airports have no business, if airlines aren't flying, if the airlines aren't bringing passengers to the airport or the airport doesn't have a viable business, they don't have an alternative. and the idea that the airport can just charge anything they like because airlines will continue to operate there, demonstrates their monopolistic, quasi monopolistic attitude to business. they're not commercial entities, and that's why we object. they don't face the same challenges that we face and they've got to realise that the best option for them is to ensure that airlines can recover.

the more passengers are flying and we get more passengers flying when we keep our costs under control and we can pass on the benefit to our customers airports trying to recover losses that they made in 2022 by, you know, significant increases in their prices this year and next. that's just unacceptable. that is an abuse of their monopolistic position. one of the biggest problems the industry faced this year, you know very well, willie, it is now staffing shortages, just not enough people. and i'm talking, you know, people from cabin crew to ground handlers that deal with luggage. is this still a problem? no, no. generally, the problem has been overcome. you know, most of the airline ceos that i've spoken to have said that they are in a position to, you know, fully staffed their operation. they're still restricted in some cases. and where or how they can operate because of closures in some parts of the world and because of restrictions

at airports. but it definitely was a problem earlier this year. again, i think people were caught out by the pace of recovery. i don't think they anticipated some of the logistical problems that they were going to face, particularly in relation to getting security clearance. and that was a major factor in the uk and most of europe. but i think these issues are largely behind us and there shouldn't be any problems in relation to the industry going forward in 2023. well, across europe, willie, if you go from the uk to the netherlands, spain and germany, there are ongoing labour problems for airlines with strikes and demands for pay rises to well, just to help tackle the cost of living crisis, are you worried with all that disruption that it'll simply damage your industry? we've faced these challenges before, and that's why i say i think these are business as usual now. the scale is different. we've not seen the same levels of inflation for many years, and that's natural that people would want to see compensation for the inflation that they're experiencing now.

but i expect these issues to be resolved. i don't think they're going to drag on indefinitely. and, you know, as i've said, we've seen challenges like this before. willie, you recently said that the west must look at reopening the russian airspace. of course, such an important airspace connecting asia and europe. but given we've got the continued horrendous russian attacks in ukraine, a comment like that could possibly raise some eyebrows. why did you say it? well, what i said is we all have to expect and hope that there will be peace in the region. and then we've got to look at, so how do we start as quickly as possible to return to normality? so when this war is over, we need to understand what measures will europe need to see to enable russian airlines to start flying back into europe and, you know, to remove the russian restriction on european airlines flying through russian airspace. it's not a safety concern because there are many airlines still flying through russian airspace. what we need to do is ensure

that we can move back towards a normal operating environment as quickly as possible. but what you're saying and part of the reason i'm assuming you said is because it's putting european carriers at a disadvantage. i mean, they have to fly longer routes to go to certain destinations. absolutely. that is the case. so if you're a european carrier flying between europe and asia, you have to avoid russian airspace, which is the shortest distance flying through siberia. it's the is the way airlines have traditionally flown to asia from europe. let me talk about china. it is, of course, the world's second biggest economy, the second biggest aviation market in the world. and now that it's begun easing some of these covid restrictions, even though case numbers have been rising, what does that mean for the airlines who want to fly there? well, when we look at china, what you've got to realise is that it's largely a domestic market. so in 2019, the chinese domestic market represented 10% of all global flying, and that therefore is the sole

preserve of chinese carriers. it's not a market in which international carriers can compete. the international market into china is about 4% or was about 4%. so it's an important market, strategically important because it was seen as a growth market. now, the signs out of china recently have been more encouraging, in fact, have generally surprised me. i didn't expect to see some of these measures. we are anticipating a relaxation and we believe that china will be more of a factor in the recovery of the industry in the second half of 2023. so everybody�*s hoping for a relaxation in the restrictions that exist there. with profits so thin and many economists forecasting recessions in different parts of the world over the next year or two, is your industry

going to have to cut back on the spending that's needed if it's to cut its carbon emissions? no, absolutely not. and in fact, there's no choice there. i think one of the reasons you can be confident about the industry continuing to do that is just look at what was happening during 2020, 2021 and 2022 when airlines were still making very significant commitments and spending significant sums of money on things like sustainable aviation fuel. so every single drop of sustainable aviation fuel that was produced in 2021 was purchased by the industry — the same in 2022. so we see this as an existential issue. we have to address the environmental performance of our industry. the industry is absolutely committed to achieving net zero in 2050, and we clearly have a, you know, a significant challenge there, but we're not going to shy away from it. and let me end on this — with the global picture and headwinds that we've painted, you're saying you're still optimistic that demand for travel will be there in 2023? yeah, we certainly see a recovery. we're expecting passenger numbers to increase by about 22% in 2023 from 2022.

and you've got to remember, we are still in recovery mode, you know, and 2023 will still be well below where we were in 2019. so there's a long way to go, but we're certainly going in the right direction. willie walsh, the big boss of iata. always appreciate your time, willie. thanks forjoining me and i'll check in with you soon. thank you. well, that's it for this week's show. don't forget, you can keep up with all the latest on the global economy on the bbc news website and the smartphone app. and of course, you can also follow me on twitter, tweet me. i will tweet you back. thanks for watching, i will tweet you back. thanks forwatching, i i will tweet you back. thanks for watching, i will see you soon, goodbye. hello. the start of the new week brought a big change in the weather. compare this picture of a snowy scene in cumbria on saturday with this picture of the same scene on monday. the snow has been replaced by a big puddle. we saw cloud, we saw rain, we saw some much milder

conditions. temperatures in north wales got very close to 16 celsius, lots of other places not too far behind. that mild air pushes up from the southwest with a lot of cloud and some outbreaks of quite heavy rain in places. as the stripe of cloud and rain clears away eastwards, we will see some slightly cooler air pushing in from the west, so those really high temperatures for monday are not going to last throughout the week ahead. equally, it's not going to be nearly as cold as it was just a few days ago. some cloud and rain in the southeast corner early on tuesday morning, but that will clear, and then we'll see sunny spells — scattered showers, too, especially in northern ireland and western scotland, mostly falling as rain, but some snow over the highest hills and mountains in scotland. windy in the far northwest, temperatures between 7—13 degrees, so it is still mild for the time of year. as we go through tuesday night,

there'll be some clear spells, but showers pushing in from the west, in fact, merging into longer spells of rain for some, particularly across parts of england and wales. temperatures down into single digits, but most places will avoid a frost. so, a soggy start to wednesday with this band of rain moving across central and eastern parts of england, that clearing to a mix of sunny spells and showers. most of the showers through northern england, northern ireland and scotland — again, some wintry ones over the highest ground here, and temperatures between 7—11 degrees in most places. into thursday, it's likely that we'll see further showers or longer spells of rain drifting up across southern parts of england and the channel islands. northern scotland getting into a northerly wind, and it will start to feel a little bit colder. that is the set—up that takes us to the end of the week and into the start of the christmas weekend. a frontal system pushing in from the southwest, but bumping into that colder air in northern scotland, perhaps giving a spell of snow. and then, that cold air in the north will try to push a little further southwards through the christmas period, but i think most places will

stay relatively mild and there will be some rain at times.

welcome to bbc news. i'm david willis. our top stories: a congressional committee recommends donald trump is charged for his role in last year's riot at the us capitol. the former movie mogul harvey weinstein is found guilty of raping and sexually assaulting a woman in los angeles. twitter users vote for elon musk, its current owner, to stand down as head of the company. so will he go? fans await the return of argentina's triumphant football team ahead of an open—top bus parade through buenos aires.