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Scooped by
Graham Watson
onto Microeconomics: IB Economics February 10, 5:04 AM
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UK projects will allow local areas to control and profit from renewable power generation, says energy secretary
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Every country supports its aerospace business, while keeping the production at home is vital. At least with Rolls the UK is backing a winner
Graham Watson's insight:
You'd almost think I give this board some thought: I set you up, and Nils Pratley brings it home.
His article for tomorrow's Guardian makes the case for why the government should subsidize RollsRoyce given the apparent profitability of the company. In the first place, all economies subsidize aviation, so not to do so would probably just see it relocate; secondly, it is challenging the government to substantiate its "modern" industrial strategy. Were it not to do so, it might signal to other firms that such a pledge is largely rhetorical and that if they want to invest in new, innovative technologies they're better looking elsewhere and that's not a good look.
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The German budget supermarket is a growing competitor among British supermarkets.
Graham Watson's insight:
The competition for staff among grocery retailers is hotting up with Aldi announcing a second pay rise for staff this year in response to Lidl GB, Waitrose and Sainsbury's announcing above-inflation pay rises for staff this month.
This illustrates two things: the competitive nature of the market, and the role that shop floor staff play in consumer perceptions of the stores, and the oligopolistic nature of the market, with firms effectively shadowing one another's behaviour. And in the former case, you might wonder whether there's a case for suggesting that the pay of shop floor workers is too low relative to that of the CEOs; I know that my shopping experience at a supermarket is much more dependent upon the individual exchanges with staff than the decisions of a CEO.
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Warner Bros says the latest proposal could convince it to abandon the deal it struck with Netflix.
Graham Watson's insight:
Paramount have increased their bid for Warner Brothers, by $1 per share, and are quietly confident that this might convince the latter to abandon the deal they've already struck with Netflix. We are entering the territory of the winner's curse, where irrespective of who wins and completes a deal is going to be a loser long-term, having paid too much to merge.
We shall see how Warner Brothers will react...
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Traders appear to be hedging against worst-case scenario of a conflict between the two nations, analyst says
Graham Watson's insight:
Basics. D&S. Oil prices. Geopolitics.
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Legal entitlements mean little when affordable homes are scarce and more are not being built fast enough. Vienna offers a better model
Graham Watson's insight:
This Guardian editorial highlights the very real costs of Scotland's housing shortage noting that a lack of affordable homes, and has contributed to a 106% rise in rough sleeping. It advocates the Viennese model and an expansion of public housing provision which would help tackle this and stabilize rents.
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Government sources tell BBC News they could slow down plans to make minimum wage equal across age groups.
Graham Watson's insight:
The government are poised to postpone a proposed move to equalise the minimum wage such that 18 to 20 year olds get the same pay as those aged 21 or older. As the article notes "Under existing rules, people aged over 21 must be paid £12.21 an hour, with a lower rate of £10 in place for 18 to 20-year-olds."
However, youth unemployment remains problematic, with 16.1% of people aged 16 to 24 unemployed compared to a national average of 5.1%, and the fear is that raising the minimum wage would disincentivise employers from taking on the young who they're going to have to train, and who, on average, will have less human capital.
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The average woman employee "effectively works for 47 days of the year for free," according to the Trades Union Congress.
Graham Watson's insight:
The Trades Union Congress have revealed that their research suggests that the gender pay gap is closing, albeit at a glacial rate. At the present rate of progress, it's going to take 30 years for the gap to disappear, although it varies from sector to sector, with the greatest inequality in financial services.
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The White House calls it the largest deregulation in US history, but environmentalists say it will prove costly for Americans.
Graham Watson's insight:
A bad day for the environment, with President Trump rolling back environmental protections governing greenhouse gas emissions and having wider implications for climate change. According to the President they will "make cars cheaper, bringing down costs for automakers by $2,400 per vehicle".
Which is ironic, because his tariffs have probably been responsible for at least that size increase in the prices paid by every American households for goods.
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Critics say the proposed tax could force families to shorten trips or spend their money overseas.
Graham Watson's insight:
The hospitality sector has called upon the government to scrap its proposals for a holiday tax in England, fearing that any increase in price would reduce quantity demanded and damage the sector.
It's an interesting tax proposal, in that it's one of the first times I've seen a tax proposed to explicitly "raise revenue", in this case for lcoal services.
Would it adversely affect the sector, and to what extent? What concepts would you bring to bear to start analysing this? And is there a difference between a tourist tax in Venice and one in Skegness? Why?
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The oil giant also suspends its share buyback programme ahead of the arrival of its new boss.
Graham Watson's insight:
BP has announced lower profits for the year, down to $7.5bn for the year, from $8.9bn the previous year, in large part due to a 20% fall in the price of oil. (Proof if it were needed that profit-related bonuses in the sector are a bit of a nonsense)
As a result, the oil giant has promised to focus on cost-cutting - i.e. job losses in all probability. And then we get the usual hagiographic praise for a Chief Executive's ability to manage costs: Cornelia Meyer, chief executive of Meyer Resources and a former BP executive, told the BBC that O'Neill had "a stellar track record", and when it comes to reviving BP's fortunes, "if anybody can, she probably can". Because there's no way that anyone else could, justifying the salary.
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The UK's markets regulator says the proposed commitments "will boost the UK's app economy".
Graham Watson's insight:
The Competition and Markets Authority has announced that Apple and Google have undertaken to change their app stores, in response to claims that they've been running them in a duopolistic fashion, limiting competition and giving preferential treatment to their own apps. However, there are concerns that this is currently the low-hanging fruit, and won't bring about substantive changes in the market. It was thought that previous arrangements acted as a barrier to entry, reduced competition and choice and harmed consumer interests.
Remarkably, for fuddy-duddies like me, the sector is a sizeable one: accounting for around 1.5% of the UK's GDP and supports around 400,000 jobs.
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UK projects will allow local areas to control and profit from renewable power generation, says energy secretary
Graham Watson's insight:
The government is pledging £1bn for community energy schemes, I suspect to try and sugar the pill for communities that see renewable projects on the doorstep but don't always perceive their benefits. Good for the environment, some say; less than manifesto pledges, say others.
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From
www
An internet craze for American-style chicken has come to the UK, but what does it mean for traditional chippies?
Graham Watson's insight:
Changing consumer tastes as the UK pivots away from burgers and pizzas in favour of fried chicken. 
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Firm, which has announced record profits and £9bn share buyback, has £3bn project for smaller commercial planes
Graham Watson's insight:
This could easily be another Business Management 'scoop' because it's provoked by Rolls-Royce announcing both record profits and a £9bn share buyback. However, given the apparent riches of the company, is it right that it should also be asking the government for a £100m to £200m subsidy to develop a smaller commercial engine for short-haul jets?
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Huw Pill warns combined effect of national insurance and minimum wage rises have ‘acute’ effect on youth employment
Graham Watson's insight:
The Chief Economist of the Bank of England, Huw Pill, has weighed into current labour debates suggesting that recent tax changes, notably the increase in National Insurance, and the rising minimum wage have increased youth unemployment.
He's right, I suspect, both about the causes and the significant cost of youth unemployment being around 16.1%
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Changes announced in the Budget mean all energy bills will see some kind of reduction, but it will vary.
Graham Watson's insight:
Good news for households with OFGEM announcing that its latest review of energy prices, will see the Energy Price Guarantee ensure that prices are going to fall by 7%, or £117 per year for the average household. However, they are still £500 higher than prior to the Ukraine war.
This is a good article is breaking down the distributional effects of this and noting that households who consume the most electricity will benefit the most as well as showing you the composition of energy prices.
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There has been a 181,000 increase in the number of zero-hours contracts since Labour was elected.
Graham Watson's insight:
An interesting snapshot of the labour market, with the number of people on zero-hours contracts reaching 1.23 million, having risen by over 180,000 since Labour were elected and despite a manifesto pledge to get rid of the practice.
It's argued that such contracts are fundamentally exploitative, and offer little job security and no guaranteed income, but, of course, employers love them because they reduce their costs.
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Local workers can be difficult to attract because of poor pay and conditions, say researchers
Graham Watson's insight:
Despite skills shortages, and the government's apparent determination to train local workers to fill jobs in sectors such as social care, it seems that the market isn't operating efficiently in resolving this, with potential workers not being attracted by the pay and conditions in shortage sectors.
Traditionally, economic theory has worked on the basis that wages would rise, not least to offset the perceived 'unattractiveness' of a particular job. However, this doesn't seem to be the case, so why might workers not be keen to accept such jobs? Free market economist will argue that it's because benefits are too generous, but from my perspective, the expectations of workers have changed, and people are more reluctant to just accept any job, something that I suspect was less prevalent 30 years ago.
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Analysis reveals big regional disparities as critics say Labour’s proposed levy could slow uptake of EVs
Graham Watson's insight:
Given falling tax revenues from fuel duty, the introduction of a mileage based vehicle tax is inevitable. This Guardian article focuses on the implications of the tax for electric cars, and notes that rural drivers are going to be paying the steepest bills, with motorists in the South West potentially paying nearly four times the amount that Londoners will.
However, paying a fixed sum per mile travelled is still fairer in my eyes than many of the alternatives.
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Nat West CEO’s £6.6m pay package for 2025 is largest for group since disgraced Fred Goodwin’s £7.7m in 2006
Graham Watson's insight:
It seems as though bankers' pay is recovering - the poor things must be struggling on their previously insubstantial offerings - and it gives us a chance to reflect on labour market theory. According to labour market theory, bankers' pay reflects their marginal productivity, or more correctly their marginal revenue product (MRPL).
However, I would argue that the labour market for chief executives is imperfectly competitive, and I would go further and suggest that it's also characterised by cartel-like behaviour.
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The Netherlands has the lowest working hours in Europe, but some say it is harming its economy.
Graham Watson's insight:
This BBC article looks at something I've not 'scooped' for a while, the nature of the working week. In this case, it looks at Dutch labour markets, where a 4 day week is far more common.
However, whereas the majority of workers seem to think that it's a good thing and that it's increased their productivity, the empirical evidence is more mixed, and the nature of the Dutch tax system might also have contributed to the 4 day week being an attractive option.
It might have increased worker retentions and lowered recruitment costs for some firms but the overall impact of it on the Dutch economy is less clearcut.
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Dutch brewer lowers forecasts for 2026 profit growth as cost of living and consumer health concerns reduce sales
Graham Watson's insight:
A lovely example of derived demand in a labour market. The demand for people working in brewing is derived from the demand for beer, and, as the article implies if people are drinking less beer, then fewer people are required to make, market and distribute it.
(As a bonus, there's even a lovely example of the difference between less and fewer that escapes most pupils these days!)
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Novo Nordisk says Hims & Hers' drugs breach its patent; Hims & Hers calls the lawsuit a "blatant attack".
Graham Watson's insight:
The first shots have been fired in the lucrative market for weight-loss drugs with Novo Nordisk suing rival, Hims & Hers, for so-called knock-off versions of Wegovy.
It's interesting because the latter product is compounded, and not subject to the same regulation as the branded version of the drug, and the Food and Drug Administration has intervened to "safeguard consumers from drugs for which the FDA cannot verify quality, safety, or efficacy", effectively erecting an artificial barrier to entry to the market.
Whilst the protection of intellectual property is an important feature of free markets, it can come at a higher cost and lower choice for consumers, and going forward Novo Nordisk is acutely aware that its patents are starting to run out in this area.
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Scientists find underwater acoustic project to stop fish being sucked into cooling systems could save 44 tonnes a year
Graham Watson's insight:
The costs of environmentally-friendly energy are laid bare in the £700m cost of the 'fish disco' designed to deter fish from entering the inflow pipes of the new Hinkley Point C nuclear power stations. Estimated suggest it will save 44 tonnes of fish life per year, and represents 1.5% of the total cost of the nuclear power station; but one wonders what the cost per fish is, given the 25 year life of the plant's subsidy contract.
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The results have been welcomed by climate and clean energy groups but could face opposition from local communities.
Graham Watson's insight:
A record renewables auction suggests that the government is looking at achieving its target sof generating 45GW of solar power by 2030, just over double the power generated during Autumn 2025.
The prospect of 157 new solar projects has been well-received by supporters but critics fear an "industrialisation of the countryside" - whatever that may mean. |
The government is pledging £1bn for community energy schemes, I suspect to try and sugar the pill for communities that see renewable projects on the doorstep but don't always perceive their benefits. Good for the environment, some say; less than manifesto pledges, say others.