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Scooped by
Graham Watson
onto Microeconomics: IB Economics October 8, 10:50 AM
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UK ministers preparing to raise payments to end standoff with pharma industry, cited as reason for firms axing British investments
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Explore the Guardian’s tracker to see which operators are nationalised and if services are improving under public ownership
Graham Watson's insight:
This interactive piece in the Guardian looks at the effects of renationalisation on the UK's rail network, and attempts to quantify whether this has improved the standard of service. The overview is that many people think that a publicly-owned railway has the capacity to be better organised, but there's a mixed picture if you look at delays and cancellations on the new renationalised arms of the service.
It's well worth a read!
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From
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The regulator has given it "strategic market status", opening the door to what it calls "proportionate interventions."
Graham Watson's insight:
It seems as though the Competition and Markets Authority (CMA) is going to ask Google to alter its search engine in the UK in the hope of increasing consumer choice in the market. The company has been given ""strategic market status", implying that it's establish a dominant position that isn't in consumer interests.
Of course, this is denied by the firm, which has argued that "Google Search contributes billions of pounds a year to the UK economy — £118 billion in 2023 alone" and that "Many of the ideas for interventions that have been raised in this process would inhibit UK innovation and growth, potentially slowing product launches at a time of profound AI-based innovation."
It's that perennial issue: to what extent do dominant firms gain that position because they're the most efficient and most innovative, or, is it the case that once they establish this position they are likely to erect artificial barriers to entry.
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Exclusive: Government failure to close loophole allows 600,000 tonnes to be shipped elsewhere each year
Graham Watson's insight:
This rather follows on from yesterday's story about the UK exporting plastic; it seems that this, and cheap plastic prices, has been responsible for a number of plastic recycling centres closing in the past two years. As the Managing Director of Biffa Polymers suggests, not only is this an economic issue, it also has ethical implications.
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Experts call for urgent strategy to end overfishing as report shows just 41% of stocks of species such as cod and mackerel considered healthy
Graham Watson's insight:
One of the few supposed benefits of Brexit was supposed to be the ability to regulate our own industries as we choose, and yet the evidence from the latest data suggests that we are continuing to overfish British waters, with stocks of cod and mackerel among the stocks that are over-exploited.
This is a classic example of the Tragedy of the Commons, and yet we should have greater control over this, now that we are out of the EU and the co-ordination costs associated with government policy should have fallen too. It seems as though we haven't taken the opportunity.
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Worsening droughts and floods have destroyed wheat for 4bn loaves of bread and forced record levels of imports
Graham Watson's insight:
This article prompts a number of responses - from a simple D&S perspective it suggests that extreme weather events mean that the price of food is higher than would otherwise be the case. However, perhaps a more pressing concern is the food waste implications of this.
Food production and consumption are notoriously wasteful - food waste is generated in both production and consumption and anything that reduces the amount of food waste - assuming that the marginal cost of the intervention is less than the marginal benefit - would clearly be a good thing.
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Renewable energy overtook coal as the world's leading source of electricity in the first half of this year - a historic first, according to new data from the global energy think tank Ember. Electricity demand has grown around the world but the growth in solar and wind was so strong it met 100% of the extra electricity demand.
However, Ember said the headlines mask a mixed global picture. Developing countries, especially China, led the clean energy charge but richer nations including the US and EU relied more than before on planet-warming fossil fuels for electricity generation.
Graham Watson's insight:
This BBC clip accompanies the earlier article looking at the rise of renewables, not least in developing economies, although fast growth of demand for electricity in the developed world has meant that there's become even more dependence on fossil fuels than previously.
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The Shenzhen-based electric car maker says the UK is now its biggest market outside China.
Graham Watson's insight:
"The Chinese are coming!" to paraphrase Colin Welland. One for the kids there....
However, Chinese EV manufacturer BYD has seen sales in the UK leap by nearly 900%, with over 11.000 cars sold last month and 100 dealerships in the UK, making it the company's second largest market after China.
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CMA poised to give verdict after appeal by five firms for permission to increase bills higher than allowed by Ofwat
Graham Watson's insight:
Interesting times in the water sector, with the regulator, OFGEM, due to rule on whether or not five water companies - Anglian, Northumbrian, Southern, Wessex and South East - can increase their bills by more than the regulator initially proposed.
It's fascinating because they are going to argue that in order to fund much needed investment, the proposed price increases are too small, and you can see that this may well be true. However, in the context of the post-privatisation era, you might also argue that previous mismanagement of the companies has brought us to this point; the difficulty though is that the companies can't act retrospectively.
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Exclusive: Differences over changes to environmental and legal provisions to prompt economic growth hint at chaos at heart of government
Graham Watson's insight:
It seems to be the case that the government are going to relax planning restrictions in the hope of kickstarting housebuilding. However, there's still disagreement about how far to go in changing legislation. Either way, it seems that the endless trade-off between economic growth and environment is going to be debated again in relation to the housing market.
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EVs rise nearly a third in September compared with a year earlier, as plug-in hybrids jump by 56%
Graham Watson's insight:
Nice little D&S story that Year 12 economists should be starting to get their teeth into. There's been an increase in the number of electric cars sold as a result of the reintroduction of a subsidy designed to encourage their take-up.
As a result, battery EV sales are up by a third and "plug-in hybrids, which combine a petrol engine with a smaller battery that can be recharged by cable, jumped by 56% to 38,300". The extent to which the quantity demanded will have increase depends upon the size of the subsidy and PED/PES, of course.
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From
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New figures reveal mums in England see their earnings drop after having a first, second and third child.
Graham Watson's insight:
The ONS has investigated the cost of women having children on their post-childbirth pay. Indeed, as the article states "Five years after having their first child, mums' earnings drop by an average of £1,051 a month compared with their salary one year before having a child" with their earnings further affected as they have more children.
It's a stark reminder of the existence of the gender pay gap and how far we've got to go in tackling it, with some staggering figures produced: the total loss in earnings when having their first child is £65,618, £26,317 for a second child and £32,456 for a third.
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Lenders say a ‘full return to legal, regulatory and environmental compliance’ under new rescue plan would not be completed until at least 2035-2040
Graham Watson's insight:
Apologies for one of my 'going off piste' moments.
However, the executives who've allowed Thames Water to get into this state should face criminal prosecution for flouting environmental law. It will be the case that they are no longer in post, but this has been a persistent campaign to evade the law and should be treated as such.
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The industry has always wanted the NHS to pay more for its drugs; now it is pulling research and investment out of Britain, says director of Global Justice Now Nick Dearden
Graham Watson's insight:
This Nick Dearden article highlights the ongoing stand-off between big pharma and the UK government. The former have postponed nearly £2bn of investment, the latter are accused of negotiating down the price of drugs to an uncompetitive level, and the voluntary scheme for branded medicines pricing, access and growth.
It's also interesting to note that their are suggestions that there's been some collusion among the drug companies when they announced the postponement of investment so closely together - something that's not inconceivable.
It's almost as if there's a bilateral monopoly in the sector. |
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Greater Anglia describes renationalisation as a step towards a "simpler, more unified" rail network.
Graham Watson's insight:
The renationalisation of the rail network continues with Greater Anglia passing into state hands as the franchise reverts back to state control and, ultimately, the creation of Great British Railways.
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Chocolate prices will be spiking this Halloween as cocoa costs have more than doubled since early 2024, driven by West African crop failures, tariffs, and global supply shortages, according to Wells Fargo’s Agri-Food Institute.
Graham Watson's insight:
This might make a nice little starter activity: how many Economic concepts can you find in this 1 minute Reuters clip detailing why this year's Halloween chocolate is likely to be more expensive than last year's.
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Competition watchdog agrees requests from Anglian, Northumbrian, Southern, Wessex and South East to raise household bills
Graham Watson's insight:
As flagged yesterday, a number of water companies asked for an independent assessment of the amount they're permitted to increase bills by, arguing that the proposed level didn't allow for the necessary level of essential infrastructure investment.
It seems that the independent panel agreed with this although not to the extent that the companies would have liked. As a result, "The (CMA) decided provisionally to let the companies collectively charge customers an extra £556m over the next five years" - albeit that's only around 20% of what the companies wanted.
The classic compromise - a solution that satisfies no-one. Consumers face higher bills, and the water companies don't get the increased revenues that they were after.
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UK ministers preparing to raise payments to end standoff with pharma industry, cited as reason for firms axing British investments
Graham Watson's insight:
It seems as though drug companies have the stronger hand, with the news that the UK government appears to be willing to increase the amount that thew NHS pays for medicines, with a 25% increase expected.
It will bring the UK more into line with the rest of Europe, if not the US, and might unlock investment in big pharma in the UK which has been postponed in the wake of this row.
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US government shutdown and uncertainty about the economy has caused a surge in value of precious metal
Graham Watson's insight:
D&S and gold. Gold as a store of value, a safe haven.
Basics, really.
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From
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Developing countries lead the historic clean energy charge but the US and EU rely more on fossil fuels than before, a think tank study shows.
Graham Watson's insight:
Is this an inflection point for the global economy - with renewable energy overtaking fossil fuels as the world's largest source of energy. However, it is interesting to note that, according to Ember, it's developing economies are leading the way, with the US and the EU more reliant on fossil fuels. Of course, President Trump's insistence on the 'con' of climate change and desire to use fossil fuels including coal, isn't going to do anything to improve this, but, overall, reasons to be hopeful.
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From
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Under new proposals, sellers and estate agents will have to provide key information about a property up front.
Graham Watson's insight:
The government is looking at ways of making it easier to buy a house, with sellers and estate agents obliged to provide more information about the house, improving information and lowering the cost of buying a house.
The hope is that it will make the housing market more efficient.
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As well as embracing ‘beautiful coal’, the president has set about obliterating clean energy projects
Graham Watson's insight:
And, unsurprisingly, as well as falling behind in the market for electric cars, the US is falling behind in all sorts of other ways in relation to renewable energy and other markets.
It doesn't help that the President is a climate change sceptic, or ignorant to a quite remarkable degree.
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Despite a recent surge in demand, the US is a laggard in EV sales compared to much of the rest of the world.
Graham Watson's insight:
Why does the US lag behind the rest of the world in terms of the take-up of electric cars? In short, there's a lack of innovation in the US and government policy hasn't been as accommodating as it has been in Europe, to the extent that the recent pick-up in sales reflects not a permanent change in consumer tastes but the fact that the government is ending a subsidy worth $7,500 (£5,588) at the end of the month.
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The EU and the UK have imposed sustainable fuel mandates, but airlines question supply availability and pricing
Graham Watson's insight:
The prospect of aviation being net zero by 2050 is largely dependent upon technological advances, not least in terms of the commercial use of sustainable aviation fuel (SAF). The EU and UK have imposed mandates, stipulating that 2% of jet fuel should be sustainable, and this will rise to 6% in the EU and 10% in the UK by 2030.
Some airlines appear to have secured sources of SAF, but far from all - not least budget airline Ryanair who have dismissed the mandate as unattainable. although there are suggestions that it could become easier to produce 2nd generation SAF.
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Creditors may well succeed in their plea for lower standards, but at this point customers deserve to see some proper detail
Graham Watson's insight:
Another Nils Pratley piece looking at the danger of unsatisfactory intervention, with the future of Thames Water being debated. The notion that the government would allow a company not to comply with existing environmental regulation for a decade is absurd, and surely Thames' creditors must realise this.
This is why, on balance, it seems that Pratley argues for temporary renationalisation. That way the Augean stables may well get swept sooner rather than later, and things like the environmental costs of marine pollution prioritised over returns to creditors, which, to be fair, is what it should be.
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If the government is in the intervention game, it should be intervening where need is most urgent – among JLR’s suppliers
Graham Watson's insight:
Excellent evaluation of the government intervention to defray the costs of the cyber-attack on Jaguar Land Rover and an introduction to how lobbying distorts policymaking.
As Nils Pratley rightly outlines JLR should be able to access cash at a very reasonable rate of interest to sustain its operations; the same cannot be said for its smaller suppliers. Similarly, whilst JLR is likely to be heard by the government, the same cannot be said for its smaller suppliers.
All in all, a fudge. But one that could have been avoided. No doubt, the government will say that lending to smaller suppliers would represent more of a risk; however, not if JLR commit to continuing to buy from them. |
It seems as though drug companies have the stronger hand, with the news that the UK government appears to be willing to increase the amount that thew NHS pays for medicines, with a 25% increase expected.
It will bring the UK more into line with the rest of Europe, if not the US, and might unlock investment in big pharma in the UK which has been postponed in the wake of this row.