Transport Economics: Rail Investment
Here is a super short transport cost benefit analysis example regarding plans to re-open a rail link between Oxford and Milton Keynes could generate millions of pounds for the economy. In total it would cost £178m and then £11.6m a year to run, but Oxford Economics says it would bring an economic benefit to the area which it estimates at £32m a year. This BBC news video would make for a good short introduction to the example, and here are some other links to coverage of the Oxford Economics research in the local papers.
Oxford Mail: Rail link could be worth £38m a year
Official web site East West Rail
Unit 3 Micro: Oligopsony - Dairy Losses Drive Farmers from the Fields
Hats off to the herd! Milk production in the UK is expanding yet many dairy farmers have or are likely to leave the industry over the next five years unless raw milk production becomes more economically viable. Can the stakeholders in the sector reach fresh agreement on sustainable contracts for the near 40 million litres of milk produced every day?
read more...»Structural unemployment in the UK - insights for 2011
The CBI has just published the first in a series of reports into the UK labour market which are certainly useful for A2 economists and their teachers. According to the CBI, the analysis reveals “deep-seated structural problems which will not be solved by a return to economic growth alone.”. The supporting website for this new research project is here. Some great data visualisation tools on the UK labour market are provided too - here is an example.
Chinese inward investment in the London property market
In mainland China, authorities have put restrictions on property speculators to dampen the market, while in Hong Kong prices have risen by 70% in less than two years. But the 25% depreciation of sterling over the last two years makes the London property market a real draw for property investors from China. Sky News reports that one in three of buyers of new properties in London come from China and Hong Kong, mainly in the £400,000 - £1mn bracket, either seeking accommodation for their children studying in London or simply an investment. If - or when - the sterling/dollar exchange rate recovers, their return will be enhanced by the increased return they could get when they take their money out of the UK market again.
read more...»Regulation, legislation and competitiveness - The Bribery Act
From the first of July, businesses will have another piece of legislation to deal with when the Bribery Act comes into law. This was proposed and passed in 2010 just before the election last May, and in the last year the government have been determining the precise way in which it should be put into practice. There are good reasons for it, to establish the country’s position as a global leader in the fight against business corruption – the UK currently holds a strong position in the World Bank’s rankings of economies for their ease of doing business.
read more...»Tuesday Talks - the cycling city
A Radio 4 broadcast from yesterday, Bristol: Cycling City, provides the inspiration for today’s extension activity - there is a short synopsis here. This 30 minute audio documentary looks at the way in which £22m has been used over the past 3 years to increase the use of bicycles by residents of Bristol. Cyclists, motorists and local taxpayers seem to think that in general the scheme has not been successful, with only a small increase in the number of cyclists combined with poorly thought-through cycling infrastructure.
After listening to the documentary, students could draw up their own cost-benefit analysis of the scheme, and discuss whether the £22m has been used in the most effective way (around two thirds of the funding went towards infrastructure and the remaining third towards education relating to cycling). More details on the specific projects that have been run as part of this scheme can be found here. Able students may want to consider how they would have tackled the scheme differently.
Timetric: Regional Unemployment in the UK
Has the recession brought about a fresh divergence in regional unemployment rates in the UK labour market? Why do some regions experience persistently higher levels of joblessness and is regional policy having any effect. The starting point is the data and this chart shows a selection of regional unemployment rates in the UK courtesy of Timetric. The chart below that provides data on another selection of regions.
read more...»Structural Unemployment - The Last Cast
In the spring of 2010 the iron and steel making plant at Corus in Redcar in Cleveland was mothballed seemingly ending a 150-year-old industry on Teesside and bringing with it an enormous challenge to the local labour market. BBC Teesside has produced many resources on the plant closure that will make the issue of structural unemployment vivid for students who want to understand many of difficulties of getting people back into work who have skills specific to heavy manufacturing. Here is a link to three short film clips on the impact of the Corus closure
Challenges facing the London Economy
James Bevan Chief Investment Officer of CCLA Investment Management spoke at our student global economy enrichment day at Fulham last week and part of his talk looked at the unemployment problems facing the London economy. His comments are produced below:
read more...»5 Fresh Links: Reforming the EU Common Agricultural Policy
The economic, environmental and social issues arising from farm support in developed and developing countries often figure in final year teaching for A2 economics. We are looking at this at the moment as part of our teaching of the economics of the EU. Here are five fresh links on the vexed question of how best to reform the Common Agricultural Policy of the EU - including two recent videos from BBC news.
read more...»Economics Q&A: What economic factors affect the demand for new cars?
The motor industry is one of the sectors whose fortunes seems to permeate nearly every part of the economy. Most of us know someone who works in the motor trade and changes in demand and production have sizeable effects not just on the industry itself but on many supply-chain businesses and economic activity in areas where car production is concentrated.
In 2010 just over two million new cars were registered in the UK - a rise of 1.8% on the 2009 figure. The biggest single course of rising demand came from the fleet market which rose by over 10% in 2010, but demand for and spending on privately bought cars slipped following the end of the Car Scrappage Incentive Scheme. Crucially for the year ahead, the new car market is forecast to decline by 5% in 2011 to 1.93 million units - according to the Society of Motor Manufacturers and Traders “difficult market conditions continue.”
So what are the main factors that affect the market demand for new cars?
read more...»A million jobs at risk from spending cuts
Stephanie Flanders looks at the possible employment effects of the government’s spending plans focusing here in government investment spending in rail - where investment programmes can have a big impact on many local economies. Several of the leading business organisations are lobbying for capital spending to be maintained because weaknesses in infrastructure might seriously hamper the sustainability of any future recovery. With long term bond interest rates at almost record lows, the rates of return required for investment to pay its way seem to be fairly low.
Video resources on UK economic growth
I have been discussing growth policies for the British economy with my A2 macro groups. Here are some of the short news videos and audios that have been used as a stimulus to discussion
read more...»The Stanford Research Park
One for the economic geographers - a fascinating tour of a research park established by Stanford University in the early 1950s which has played host to some vastly successful businesses - old tech and new - and which has become a phenmenonal source of income for the university. Many universities in the UK have sought to create Science Parks and other clusters of emerging industries - but are perhaps light years away from the scale and impact of this example.
Whisky galore - investment in the Scottish economy
There is a lot of interesting economics in this short BBC news clip on the opening of a new large-scale distillery near Elgin in Scotland. I enjoyed some great times nearby two years ago when I completed the Speyside Way and it is heartening to see the new investment from Diageo in boosting the production capacity of an industry that - remarkably - contributes 25% of the total value of food and drink exports from the UK
Income elasticity of demand - London’s luxury hotels
The BBC’s Joe Lynam (who tweets here) considers the prospects for a new and recently renovated cluster of luxury hotels due to open in London in the coming months. Some hotel industry insiders feel that London risks creating too much room capacity in the capital but others point to the fact that room occupancy rates have by and large avoided the worst effects of the recession. Sneak a view of one of the two £10,000 per night suites at the Savoy!
read more...»Regional economics: Value added of the Scotch whisky industry
Scotch whisky is worth nearly £4bn to the Scottish economy, according to research carried out for the industry and reported here on the BBC news web site. The Scotch Whisky Association (SWA) commissioned an update of the economic impact of Scotch Whisky on Scotland’s economy and Verso Economics have just published their research.
Is the UK coal industry turning a corner?
These are fascinating times for the UK coal industry. Over several decades, production of coal from an industry that once employed hundreds of thousands was in steep decline. The nadir appeared to be the early 1990s when an accelerated pit closure programme was introduced as the UK turned decisively towards gas a major energy source. The result was the end for deep-mine activity for thousands of miners, high levels of structural unemployment and major economic and social problems for local communities.
read more...»The cutting begins…
The first round of government spending cuts were announced earlier today amounting to £6.2 billion. Whilst this is not “austerity” of the sort that Greece has been talking about recently, they are genuine cuts, albeit further measures are still required to tackle the huge black hole in the public purse.
read more...»A2 Economics Revision - Microeconomics of Labour Migration
1) Explain the circumstances in which an economy may see a rise in net inward migration of labour (15 marks)
and
2) Evaluate the view that free movement of labour within the European Union improves the efficiency of British businesses (25 marks)
The end of Newcastle Brown Ale brewing on Tyneside
An iconic drink whose sales in the USA out-strip demand in local pubs and clubs - the Federation Brewery in Gateshead has brewed its last barrel of Newcastle Brown Ale as production transfers to Tadcaster in Yorkshire! It could be a useful micro-example of structural unemployment in the regional labour market. The good news is that Newcastle Brown Ale will now be produced less than three miles from Tutor2u’s Head Office! On a good day and with the wind in the right direction, the head wafts of Brown Ale malts may well find their way into our building!
Super-fast broadband slows down again
Figures comparing growth in UK productivity consistently show us falling behind our major competitors. As Geoff highlighted in this recent blog, there are many underlying factors on the supply-side of the economy and one of them is infrastructure bottlenecks caused by, among other things, slow broadband speeds.
read more...»A widening North-South divide
Fresh data on regional household income confirms a widening gap between northern and southern regions. In 2008, regional household disposable income per head was above the UK average in three regions: London (£19,038); the South East (£16,792) and East of England (£15,509). The lowest GDHI per head was in the North East (£12,543). More comment here from the Guardian.
The ONS calculation adds up wages, benefits, pensions and other forms of income such as share dividends, and subtracts taxes, pension contributions and interest payments on mortgages or credit cards.
Nissan turns over a new Leaf
This is a hugely important announcement and boost for the North east economy whose long term future must be built on competitive advantages in the emerging low-carbon industries of tomorrow. The decision to manufacture the lithium-iron batteries used in the Leaf electric cars is the key to the employment creation effects of the new investment by Nissan. Note too the role played by government financial support. The investment is backed by a £20.7m government grant and up to £220m from the European Investment Bank.
The Nissan car plant is the most productive in the European Union. The plant opened in 1984 and has so far built 5.6 million cars. It produced a third of all cars built in Britain in 2009. Digby Jones sings the praises of businesses such as Nissan in this super interview on the Politics programme a few days ago.
Made in the North East
On the day that Corus starts to mothball the steel plant at Redcar, there is important positive news for Tyneside with an announcement that a Windfarm blade plant is to open on Tyneside with the prospect of creating 500 new jobs in the next six or seven years. And this article from the Times is also optimistic for the region if they can develop and build a new expertise and competitive edge in creative industries, tourism and low-carbon eco-jobs.
read more...»Revision Presentation - Housing & the UK Economy in 2010
This new revision presentation examines the links between the housing market and the UK economy.
Download printable slide handout
Flexible taxation
A report in Monday’s Times examines the way in which local councils are trying to avoid increases in council tax bills over the next year.
Focusing on London councils, it is expected that on average council tax bills will be frozen, with a number of councils actually reducing local tax bills for residents. This is due in part to low inflation, but also to the local elections in London which will take place next May acting as an incentive for councillors to reduce the burden on their electors.
read more...»One family in six in the UK has no one in work
There are now over 3 million households in the UK where no one of working age is in any form of work - the relentless rise of the ‘workless household’ is highlighted by new figures from the Office for National Statistics who have found that the number of working-age people in workless households jumped by 500,000 to 4.8 million in the year to June. 17% of households with people of working age have no one participating in the formal labour market. 2 million children belong to them and the risks of persistent and deep poverty are greatest for these groups. Little wonder that benefit dependency is rife for such families - the paradox is that those on the lowest incomes or whose main source of income are transfer payments, often face the highest effective marginal tax rates. Crucially the depth of non-employment is highest among lone-parent families - the workless household rate was highest for lone parent households, at 40.4 per cent,
Here is a regional snapshot of the problem - with the North East, Inner London and Northern Ireland suffering from the highest rates of economic inactivity among families with one or more people of working age
Full speed ahead
Yesterday, Network Rail proposed a new £34 bn high-speed railway line linking Scotland and London by 2030, which would get passengers from London to Manchester in an hour; and London to Glasgow in two and a quarter hours.
read more...ȣ1bn programme to electrify the Great Western Mainline
This Times article covers the announcement of a major investment in the rail network - £1bn of extra spending to electrify the Great Western Mainline. About 300 miles (480km) of line will be upgraded at a cost of £1.1billion, including tracks from Didcot to Oxford, Reading to Newbury and Liverpool to Manchester. Lord Adonis the current Transport Minister is quoted as saying that the scheme will “pay for itself over a 40 year time period”. The investment might make a good case study for cost benefit analysis: Students might generate a series of advantages / disadvantages and then discuss how they divide into private and social costs and benefits.
read more...»
