Hotels in the town are in such demand that some of the world’s most highly paid chief executives are having to forgo their usual, salubrious lodgings for single rooms in two-star establishments.Security has never been tighter and outside the event itself, Davos is like a ghost town, inhabited only by security men and soldiers. Many residents have chosen to leave for the duration, despite the fact that the skiing season, one of the town’s primary sources of income, should be in full swing.The overall cost of protecting the event has risen to nearly €10m (£6.6m), some of it paid for by the WEF, but much of it by the Swiss government, which still regards the forum as a big draw. The focus of security has switched too, from the anti-globalisation protesters to the threat of a terrorist attack. It is sometimes said that more than two-thirds of global wealth comes to Davos for the summits, making it an obvious target. As a deterrent, the Swiss government has said it will shoot down any unauthorised aircraft, including hot-air balloons, that stray within a 50-mile radius of Davos.Big hitters expected to attend include the US Secretary of State, Colin Powell; Bill Gates, chairman of Microsoft, and the newly elected Brazilian president, Luiz Inacio Lula da Silva. The British Trade and Industry Secretary, Patricia Hewitt, flies in today.In keeping with the sobriety of the times, the customary Saturday night black-tie “Gala Soir? with cabaret has been cancelled in favour of an evening of classical music.

The WEF, which has organised the event around the theme of “restoring public trust”, felt ostentatious partying would send out the wrong message.And the triumphalism that once characterised these meetings is almost absent. Since the Enron and WorldCom scandals, and with savings decimated by the stock market collapse, no one quite likes to boast any more, even if they’ve got something to boast about. As one participant glumly put it; “At the height of the dot boom, our main concern was about how we should brand our website, or that our stock price had risen by only 100 per cent over the past year. Today we worry about whether we are going to end up behind bars”.The world’s elite has much to be worried about.

According to an international poll commissioned by the WEF, we now live in a world where the most trusted organisations and institutions are those without power – NGOs and religious bodies – while the least trusted are governments, politicians and companies. Over the last year, public trust in established political and business leaders has continued to fall alarmingly. There is a big decrease in almost every country in the number of citizens who think the world is going in the right direction. Only in China do people generally feel that things are getting better.Presenting the findings, Doug Miller, the president of Environics International, characterised the collapse of trust in the institutions of advanced capitalist economies as “a growing and significant threat to global stability”.Most of the largish contingent of American business leaders and economists here attempt to put as positive a spin on the economic outlook as they can, but no one is confident in their forecasts.

Gail Fosler, chief economist with The Conference Board, a US forecasting group, expects America’s growth this year to return to a trend of about 3.5 per cent but even she, an unrepentant optimist who has often been wrong before, admits that war in Iraq could upset that.As for Europe, few are prepared to predict growth of more than 1.5 per cent to 2 per cent and there is general resignation to the idea that things are unlikely to improve much until Germany grasps the nettle of structural reform No one here thinks that likely any time soon. “Forget the five economic tests”, said Jurgen von Hagen, professor of economics at Bonn University. “Britain would be unwise to join the euro while Germany’s trend rate of growth remains so much lower than her own.”. The Swiss food giant Nestl?ontinued its assault on the global ice cream market yesterday by scooping ownership of the luxury M?pick ice cream brand, also of Switzerland.