Macroeconomics: UK economy, IB Economics
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Macroeconomics: UK economy, IB Economics
A brief overview of relevant articles for IB, A-Level and Pre-U economists relating to the UK economy
Curated by Graham Watson
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Rightwing thinktanks unveil radical plan for US-UK Brexit trade deal | Politics | The Guardian

Rightwing thinktanks unveil radical plan for US-UK Brexit trade deal | Politics | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Groups linked to Trump and Fox want foreign competition in NHS and regulations bonfire
Graham Watson's insight:

For others, the Brexit future looks like this - with the Initiative for Free Trade (IFT, a thinktank founded by Daniel Hannan MEP, a legendarily honest rambler, and the US-based Cato Institute.

 

They argue in favour of a bonfire of regulation and a free trade deal to end all free trade deal, increasing competition in a range of sectors, not least the NHS.

 

Of course, all of this is predicated upon the 'special' relationship - which means that the US will play fair, and that, no doubt, the likes of Hannan and Liam Fox MP, and their chums, will do exceptionally well out of such a deal, not least in the form of non-executive directorships.

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BMW to close Mini plant for a month post-Brexit

BMW to close Mini plant for a month post-Brexit | Macroeconomics: UK economy, IB Economics | Scoop.it
The factory will bring forward its annual shutdown to avoid disruption in case of a no-deal departure.
Graham Watson's insight:

Yet more good news from the car industry, with BMW now saying that they are going to be shutting their Mini plant in Oxford for a month in the aftermath of Brexit, at the end of March 2019.

 

Ostensibly, this is to allow them to bring forward their summer maintenance shutdown to coincide with the possibility of this being a period of uncertainty, not least if there's no deal.

 

I'm sure that they'll be called charletans, nonetheless...

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Is the UK ready for Brexit? - BBC News

With six months to go until the UK's departure from the EU, BBC News asked the Institute for Government to assess the government's progress towards Brexit
Graham Watson's insight:

And as if to substantiate the claims of the car industry, the BBC looks at the Institute for Government's view of the degree of preparedness for Brexit. It might not make for comfortable viewing, whichever side of the Brexit vote you supported.

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Jaguar Land Rover boss 'scaremongering' on no-deal Brexit, says Tory | Politics | The Guardian

Jaguar Land Rover boss 'scaremongering' on no-deal Brexit, says Tory | Politics | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Hard Brexiter Bernard Jenkin says worries about border delays are unfounded
Graham Watson's insight:

Presumably Bernard Jenkin thinks that Ralf Speth has introduced a shorter working week in Solihull simply to underscore his point... 

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No-deal Brexit would hit UK economy, says IMF

No-deal Brexit would hit UK economy, says IMF | Macroeconomics: UK economy, IB Economics | Scoop.it
Leaving the EU without a deal will entail "substantial costs" for the UK economy, the IMF warns.
Graham Watson's insight:

The IMF line up with the Treasury on the prospects for the UK economy after Brexit. Await the raft of Leavers keen to point out the shortcomings of previous IMF forecasts.

 

And perish the thought that it's a 'no deal' Brexit...

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UK growth forecast trimmed by British Chambers of Commerce

UK growth forecast trimmed by British Chambers of Commerce | Macroeconomics: UK economy, IB Economics | Scoop.it
The BCC lowers its UK growth forecasts, and says Brexit uncertainty is harming the economy.
Graham Watson's insight:

Another growth forecast which suggest subdued growth ahead...

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An economic recovery based around high debt is really no recovery | Larry Elliott | Business | The Guardian

An economic recovery based around high debt is really no recovery | Larry Elliott | Business | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Ten years after the Lehman collapse the necessary reforms to a flawed model have not taken place
Graham Watson's insight:

Larry Elliott in fine form here, writing about the recovery from the global financial crisis, and arguing that we've not really learnt from the past. 

 

He cites the conclusions of a recent paper by Rickard Nyman and Paul Ormerod - suggesting that the high level of private sector debt was to blame and that, contrary to the fixation on public sector debt since then, we've lost sight of this essential truth. 

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UK market towns embrace foodie wave to revive ailing centres | Business | The Guardian

UK market towns embrace foodie wave to revive ailing centres | Business | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Leaders in struggling town centres have expressed interest in model spearheaded by Macclesfield and Altrincham
Graham Watson's insight:

Is this the start of the high street revival? And in Macclesfield, my home town, to boot. The experience of Altrincham appears to suggest that the rise of the foodie might allow town centres to reinvent themselves.

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British Steel to axe almost 1 in 10 jobs | Business | The Guardian

British Steel to axe almost 1 in 10 jobs | Business | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Steelmaker blames weak pound and euro but pledges not to close plants
Graham Watson's insight:

Job losses at British Steel, and potential negative multiplier effects at those places where the job cuts are made.

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Brexit: Carney warns no-deal could see house prices plunge

Brexit: Carney warns no-deal could see house prices plunge | Macroeconomics: UK economy, IB Economics | Scoop.it
Bank of England governor Mark Carney tells the cabinet a no-deal could see home prices plunge.
Graham Watson's insight:

To the untutored eye, this might look like a warning about the consequences of a 'no deal' Brexit. To me, it is the clearest explanation of why such an event will not come to pass. A one-third plunge in house prices will make the Conservatives unelectable for a generation.

 

However, you might think about what the macroeconomic implications of that would be. Horrendous, is the short answer.

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Bank of England leaves rates on hold amid Brexit uncertainty

Bank of England leaves rates on hold amid Brexit uncertainty | Macroeconomics: UK economy, IB Economics | Scoop.it
Policymakers at the Bank of England vote 9-0 to leave rates at 0.75% after last month's increase.
Graham Watson's insight:

No change to interest rates - and no real surprise there either. Mark Carney's decision to stay on until 2020 might involve relatively little in the way of active monetary policy interventions in the next few months.

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Costs of Brexit: is there 'nothing to fear' from project fear? | Politics | The Guardian

Costs of Brexit: is there 'nothing to fear' from project fear? | Politics | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Pro free trade economists claim leaving the EU single market would increase UK living standards – but beware of how they crunch the numbers
Graham Watson's insight:

I'm amazed that Phillip Inman could be bothered to try and dig through the superficiality of the Economists for Free Trade Brexit report, which argues that a clean break with the EU would enhance living standards.

 

However, he does, and he concludes that many of the assumption on which it is based do not stand up to close scrutiny: it appears that WTO rules won't protect us, and neither will the EU allow us unimpeded access to its markets.

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Jaguar Land Rover warns Brexit 'no deal' would cost it 'tens of thousands of jobs'

Jaguar Land Rover warns Brexit 'no deal' would cost it 'tens of thousands of jobs' | Macroeconomics: UK economy, IB Economics | Scoop.it
Jaguar Land Rover boss Ralf Speth has issued a stark warning to the Prime Minister on Brexit, warning “tens of thousands” of jobs will be lost at the country’s biggest car maker if she does not “get the right deal” on the UK leaving the bloc.
Graham Watson's insight:

The starkest warning about the danger of a 'No Deal' Brexit comes from JLR boss, Ralf Speth, who has explicitly highlighted the higher costs, and inevitable job losses, associated with it.

 

Good news, eh?

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Employers condemn Brexit immigration advice for ministers | Politics | The Guardian

Employers condemn Brexit immigration advice for ministers | Politics | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Migration advisory committee says preferential rights for EU workers should end and visas given only to higher earners
Graham Watson's insight:

The government's migration advisory committee are of the view that post-Brexit Britain should be characterised by an immigration policy that doesn't favour EU workers, and that only grants visas to people working in jobs earning more than £30,000 per year.

 

Good luck with that I say. The Committee itself is of the view that the existing stock of workers and their families is going to be sufficient to meet the needs of low-paid sectors, and that increases in youth mobility will also help. The construction, care home and the hospitality sectors are less convinced. Currently migrant occupy around 20% of all jobs in low-paid sectors, and considerably more in others, such as agriculture.

 

Expect this to be a live issue as we approach Brexit.

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EU migrants worth more to public finances than UK-born, study claims

EU migrants worth more to public finances than UK-born, study claims | Macroeconomics: UK economy, IB Economics | Scoop.it
EU migrants pay more tax than the average British adult, leaving the UK’s public finances at risk and making post-Brexit tax hikes more likely, according to Oxford Economics.
Graham Watson's insight:

Oxford Economics substantiates a well-known claim about the value of EU migrants to the public finances. The average migrant is a net contributor, the average UK-born citizen a net taker from the public purse.

 

Of course, the greatest irony of all is that the elderly, themselves the largest drain on public finances, in a way that you and I can only dream of, voted to leave the EU in part because of their fears of immigration, stoked by unscrupulous politicians. Hey ho!

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Honda: No-deal Brexit 'would cost tens of millions'

Honda: No-deal Brexit 'would cost tens of millions' | Macroeconomics: UK economy, IB Economics | Scoop.it
The Japanese carmaker would be less competitive if the UK quits the EU without a deal, it tells the BBC.
Graham Watson's insight:

Talking of collusion, it seems that the car industry has reached a fairly definitive position on the possibility of a 'No Deal' Brexit,. This time it's Japanese giant Honda supporting the claims of JLR's Ralf Speth.

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Jaguar workers put on three-day week until Christmas

Jaguar workers put on three-day week until Christmas | Macroeconomics: UK economy, IB Economics | Scoop.it
The UK's largest carmaker says it is making "temporary adjustments" to shifts at its Solihull plant.
Graham Watson's insight:

Dramatic regional news - the JLR plant at Solihull is being put onto a 'three-day week' until Christmas, with some arguing that this is a symptom of both Brexit and the mismanagement of the transition to diesel.

 

Perhaps this is what prompted the outburst from Ralf Speth last week. The departure of JLR from Solihull would be a major blow, both to the region and the sector.

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Income 'not the only factor' in poverty

Income 'not the only factor' in poverty | Macroeconomics: UK economy, IB Economics | Scoop.it
The Social Metrics Commission says assessments should include "inescapable" costs, as well as income.
Graham Watson's insight:

One for my Sixths Economics group, who should be well aware of the multi-dimensional nature of poverty. This article highlights the latest Social Metrics Commission view that poverty has other "inescapable" costs, notably social exclusion.
 
However, it is also interesting that the greatest cause of poverty is still identified as worklessness: according to the piece: "The measurement puts 68% of those in families where no-one works in poverty" 

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Mark Carney’s stress tests reinvent project fear by accident | Business | The Guardian

Mark Carney’s stress tests reinvent project fear by accident | Business | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
The grim scenarios presented to No 10 only arise because the Bank proposes to raise rates in a crisis. Why would it do that?
Graham Watson's insight:

Phillip Inman looks at the Governor of the Bank of England's intervention into the Brexit debate, and his forecasts for what might happen in the event of a 'no deal' Brexit. 

 

He argues that if the worst comes to pass, we will see inflation, rising unemployment and a house price crash. And the solution? Raising interest rates. 

 

This sounds counter-intuitive - and Inman suggests that the Bank should actually be considering the opposite.

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Universal credit ‘costs the self-employed thousands of pounds a year’ | Society | The Guardian

Universal credit ‘costs the self-employed thousands of pounds a year’ | Society | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Businesses, unions and charities warn the rules are biased against those setting up their own companies
Graham Watson's insight:

The system of Universal Credit isn't universally liked. This Observer piece looks at one aspect of this - the impact of the system on the self-employed. 

 

This is another flaw in a system that is increasingly looking like it might end up being an example of government failure, despite the best of intentions. 

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Ten years after the crash: have the lessons of Lehman been learned? | Yanis Varoufakis and others | Opinion | The Guardian

Ten years after the crash: have the lessons of Lehman been learned? | Yanis Varoufakis and others | Opinion | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Our panel of writers considers what has changed – and what still needs to
Graham Watson's insight:

A fascinating collection of views as to whether the lessons of the global financial crisis have been learned. This looks both Left and Right, and the general conclusion put forward by the Guardian is 'No, not really'.

 

That, however, isn't a universal view.

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Why the shock of 2008 still matters today

Why the shock of 2008 still matters today | Macroeconomics: UK economy, IB Economics | Scoop.it
Ten years ago the collapse of an American investment bank changed British life forever.
Graham Watson's insight:

This is a nice little clip looking at the implications of the financial crisis. My only problem with it - the fact that it's clearly been voiced over by someone on work experience.

 

Some of the Economics is a bit simplistic - but lots of the 'vox pops' are quite interesting. And I have to agree with Winifred Robinson about the consequences for intergenerational equity, and disagree about the extent to which people stuck 'two fingers up' to the establishment...

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No-deal Brexit could tip UK into recession, warns Moody's | Business | The Guardian

No-deal Brexit could tip UK into recession, warns Moody's | Business | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
Credit ratings agency says failing to agree deal will lead to weaker pound, higher inflation and pay squeeze
Graham Watson's insight:

Ostensibly, bad news. 

 

But on the 10th anniversary of the global financial crisis, it's worth noting that these same ratings agencies gave many of the financial products responsible for triggering the crisis A ratings. So it might be worth taking their opinions with a pinch of salt. 

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Hammond: 'Shock' of financial crisis still with us

Hammond: 'Shock' of financial crisis still with us | Macroeconomics: UK economy, IB Economics | Scoop.it
The UK's chancellor admits peoples' incomes are suffering, but sees "light at the end of the tunnel".
Graham Watson's insight:

The Chancellor of the Exchequer reflects on the impact of the global financial crisis. I like the fact that he's prepared to admit that incomes are suffering but that there's "light at the end of the tunnel".

 

Oh the irony! I wonder how often he, or his predecessors have said that in the intervening time period. As I've said before, I suspect that when the history of the period is written, Gordon Brown will do rather well in comparison with many other political figures of the day.  

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Housebuilders warn strict migration rules will harm housing supply post-Brexit

Housebuilders warn strict migration rules will harm housing supply post-Brexit | Macroeconomics: UK economy, IB Economics | Scoop.it
The Government risks “pulling the rug out” from beneath the construction industry and would struggle to meet its target of building 300,000 new homes per year if it imposes strict migration rules after Brexit, housebuilders have warned.
Graham Watson's insight:

More good Brexit news! This time from the construction sector, which has highlighted the fact that any tightening of immigration rules will affect their ability to meet its target of 300,000 new homes per year.

 

In the first place, they're never going to hit that target anyway. Secondly, I'm sure that Jacob Rees-Mogg's liveried footmen will lend a hand building social housing in his constituency.

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