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Are fireworks in London a public good?

Thursday, September 18, 2014

London's New Year's Eve fireworks display is to be limited to a viewing area of 100,000 ticketed spectators for the first time. The event's popularity made it "untenable" to strain the transport and safety infrastructure with a larger number, the Mayor's office says. Hence the decision to charge £10. This poses a question about the nature of public goods.

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Paul Ormerod: Innovation, Job Losses and Living Standards

Wednesday, June 18, 2014

Here is your starter for ten. What do the Uber app and David Ricardo have in common? Ricardo, I hear you ask. Scarcely known outside academic economics, he ranks equal with Adam Smith and Keynes as the greatest ever British economist. His classic Principles of Political Economy was published in 1816. He made millions of pounds on the stock market, at a time when a million was a vast amount of money.

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Unit 1 Micro: Housing Market Failure

Tuesday, May 06, 2014

Here is an updated revision presentation covering aspects of market imperfections / market failure in the UK housing industry. 

I have also linked to a recent presentation on the economics of rent controls.

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UK Housing Industry: Turning Houses into Gold!

Thursday, May 01, 2014

Britain’s crisis of housing affordability is nothing to do with foreign speculators, according to Paul Cheshire writing in the Spring 2014 issue of CentrePiece magazine. Rather, it is a result of decades of misguided planning policies that constrain the supply of land and turn houses into something like gold or artworks. Houses have been converted from places in which to live into people’s most important financial asset.

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Cost Benefit Analysis - The Crossrail Project

Sunday, April 27, 2014

Here is a streamed version of a revision presentation on the Crossrail project, a good example to use when teaching transport economics and the main principles and issues governing a cost benefit analysis approach to infrastructure investment appraisal. It is designed for use with AS and A2 economics students.

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Unit 2 Macro: The Changing Face of East London

Saturday, April 12, 2014

This Financial Times video report looks at the economic transformation of East London prompted in part by high levels of inward investment from the Far East. Consider the economic benefits of this investment but also the challenges of rejuvenating a part of London which for decades has lagged behind the rest of the capital in nearly every economic and social metric,

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Financing the current account deficit

Wednesday, April 02, 2014

More on the implications of the UK’s massive current account deficit. Geoff has put together almost everything you need on the topic here, and he points out that the main implication is a net leakage from the circular flow of income, reducing AD and weakening multiplier effects.

A current account deficit is not necessarily a disaster; after all, imports are good too, sustaining our standard of living and is partly a reflection of the demand for intermediate goods our economy needs to stay efficient.

I’m going to pick up on the the statement that there is nothing wrong with a trade deficit. It simply means that a country must rely on foreign direct investment or borrowed money to make up the difference.

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Unit 2 Macro: London House Prices continue to Surge

Friday, March 28, 2014

There seems little that is stopping the surge in London house prices at the moment but do you think the rapid acceleration of prices is good for either London or the wider UK economy? 

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Geographical mobility of labour in the UK

Saturday, March 22, 2014

One type of market failure that contributes to inequality and unemployment is the geographical immobility of labour

If the labour market really ‘cleared’ effectively, wages would equalise across the economy. Workers would drift away from regions with low wages and/or high unemployment towards areas where wages were higher and labour was scarce. 

Instead, we see wide disparities in earnings and pockets of regional unemployment - at the same time as skills shortages and wage inflation elsewhere.

Why are people finding it hard to move across the UK in search of work?

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UK Economy: Mind the Gap: London v the Rest

Tuesday, March 04, 2014

Mind the Gap! Evan Davis has produced two superb programmes on the regional imbalances in the UK economy. In the first he focuses on the agglomeration / network economies of scale that help to explain the skew in business investment towards the capital. In the second he looks at which cities elsewhere in the UK might be drivers of renewed growth of incomes, investment and growth! Here are the links:

Mind The Gap Episode 1 - click here

Mind The Gap Episode 2 - click here

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London and Reinventing the Future

Friday, December 13, 2013

If you didn't quite grasp the importance of agglomeration economies in driving and sustaining growth and wealth creation in cities, then this wonderful piece from Bridget Rosewall will do it I am sure! It highlights the importance of vision and a willingness to take risks in bond-funded infrastructure projects in London (and elsewhere). Bridget Rosewall's new short book is available direct from the publishers - click here for details

London’s Super Sewer

With London’s Victorian sewage system struggling to cope, the 25km Thames Tideway tunnel is intended to boost capacity. But the £4.2bn Super Sewer project has run into considerable and vocal opposition. London's main sewers are over 150 years old and built for a city for 2.5 million people. The population of London is now over 8 million and when heavy rainfall arrives, there are frequent and sizeable discharges of raw sewage into the river Thames. 39 million tonnes of untreated sewage flushes into the Thames in a typical year - that’s enough to fill the Royal Albert Hall 450 times. The sewage discharges puts the UK in breach of the EU Urban Wastewater Treatment Directive.

Critics of Thames Water argue that they have under spent on sewage system maintenance over the years despite recording persistently high profits. Thames Water announced £150 million profits in 2012.

Residents around the 21 proposed construction sites have protested about the externalities connected to the project. Other opponents argue that the money would be better spent on cheaper sustainable urban drainage techniques.

Future generations will benefit but today's water users will pay most of the construction cost with higher water bills imminent for a number of years to come. The Thames Water proposes adding £70 to £80 a year indefinitely to the average bill of Londoners to fund the 16-mile sewer from Acton in west London to Abbey Mills in east London. But a report by Bloomberg New Energy Finance calculates that the tunnel could be built for between £30 and £35 per household per year

Guardian: London super sewer 'should be scrapped in favour of cheaper projects'

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Unit 1 Micro: Housing Rent Controls

Tuesday, November 26, 2013

The cost of renting property in many parts of the UK continues to rise - would rent controls make any difference? Here is an updated Unit 1 economics revision presentation.

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Immigration - the Fiscal Costs and Benefits

Tuesday, November 05, 2013

UK immigrants who arrived since 2000 are less likely to receive benefits and less likely to live in social housing than UK natives. What’s more, over the decade from 2001 to 2011, they made a considerable positive net contribution to the UK’s fiscal system, and thus helped to relieve the fiscal burden on UK-born workers.

The positive contribution is particularly evident for UK immigrants from the European Economic Area (EEA – the European Union plus three small neighbours): they contributed about 34% more in taxes than they received in benefits over the period 2001-11.

These are the central findings of a comprehensive analysis of the fiscal consequences of immigration to the UK, published today by the Centre for Research and Analysis of Migration (CReAM) at University College London.

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HS2 Cost Benefit Analysis

Tuesday, September 24, 2013

There are lots of resources out there for students and teachers wanting to cover the debate about HS2 - here is a brief selection of video clips on the debate

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Introduction to Micro: UK Housing Shortage

Tuesday, September 10, 2013

As part of our introduction to micro economics we have been looking at the shortage of housing in the UK. The chronic shortage of affordable and suitable housing raises many micro (and macro) issues and I find it a good example of an issue where different policy measures can be looked at in a non-technical way as a path into supply and demand analysis. It also covers the ground with topics such as scarcity, changing needs and wants, affordability, cost-benefit principles, opportunity cost and production possibilities.

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Business Economics - Inside Tech City

Sunday, September 01, 2013

The International Business Times is producing a series of short videos on life, work and enterprise inside Tech City - a fast-growing hub of digital start ups and established tech businesses centred around Old Street / Digital Roundabout. The clips reveal the energy of the start-up economy in this part of London and the importance of network effects, collaboration and attracting human capital in accelerating routes to market for lean start-ups. This series of short videos is worth a look if you are interested in this potentially significant catalyst for growth in the UK economy and to learn more about the factors that influence the emergence and success/failure of start ups.

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Unit 1 Micro: Under Heathrow’s Flight Path

Saturday, July 13, 2013

Frustrated by the noise of trans-Atlantic airplanes flying low overhead, a school near London's Heathrow airport has come up with an innovative solution - superadobe structures originally designed for use in earthquake zones. This short news video from Reuters is a vivid reminder of the negative externalities created from jet aircraft - in this case disrupting lessons and playground activities.

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Transport Economics - Sorting out Transport in London

Saturday, June 29, 2013

We link here to a recent lecture given by Professor Doug McWilliams at Gresham College that might be of particular interest to students and teachers who are taking the transport economics option. 

London has some major disadvantages that would make any transport policy difficult. However, even given the constraints, the current policy mix is so far away from ideal that it could be costing each household about £1,000 more than it should if transport were to be organised rationally. The lecture outlines some proposals for transport reform in the capital.

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Unit 2 Macro: London Gateway Super Port Prepares to Open

Wednesday, June 12, 2013

The scale of the new London Gateway Super deepwater Port is truly stunning and its importance to the economy as a trading nation is hard to underestimate - Britain will have a new world class hub port in a key location impacting on many trades and services in and around the South East and beyond. It has taken 10 years to establish and build this huge new infrastructure project, building eventually started in 2008.

Behind the port sits Europe's largest logistics park connected to the South east by road and rail.

This Financial Times news video looks at the background to the project - it is a good example to consider of the macroeconomic consequences of the investment. What price a new Thames Estuary airport (supported by Boris Johnson) to amplify the transformative impact in the years ahead?

Update: BBC news (November 2013) - click here

London Gateway is new competition for Felixstowe port

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HS2 The Ultimate Vanity Trainset

Monday, January 28, 2013

Today's announcement of routes for the HS2 project highlights the importance governments ascribe to public works projects.

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Economics of a Living Wage

Wednesday, November 14, 2012

Get Adobe Flash player My AS macroeconomics students this week are researching the topical issue of a living wage  and the possible macroeconomic effects. The title of the assignment is:

"The introduction of a living wage in Britain to supplement a minimum wage will improve the long term performance of the UK economy" Discuss. (20 marks)

I have put together some news articles and videos on this topic using a Pinterest Board. You can find it by clicking here

BBC Newsnight Report on Living Wages - July 2012 - click here 

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Unit 2 Macro: Ford announces the closure of UK assembly plants

Friday, October 26, 2012

The headline news from the Financial Times could not be starker. Ford Motors has announced the closure of its last two remaining assembly plants in the UK  with the probably loss of thousands of jobs. The Ford Transit plant in Southampton will close in early 2013 and a tooling factory will close in Dagenham, east London. Workers in these two factories are paying a heavy price for the sustained fall in new vehicle orders and production since the credit crunch came in 2007. Since then there has been a more than 20 per cent decline in total demand for vehicles. New passenger car registrations in Europe are expected to be just over 9 million in 2012 compared to 13 million in 2011 and 15 million in 2007. Demand for commercial vehicles has also suffered as businesses have cut back on their capital investment.

Ford is not alone in making difficult decisions to restructure their European business as a way of stemming losses and maintaining competitiveness in a hugely difficult market. Many other leading car manufacturers are taking steps to lower their production costs and survive this turbulent period:

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Unit 2 Macro: Migration and the UK Economy

Sunday, May 20, 2012

A revision blog on the economic impact of migration on the UK economy

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Unit 2 Macro: Heathow’s Capacity and Connectivity Crunch

Sunday, April 22, 2012

The capacity and efficiency of our transport infrastructure has a huge bearing on the supply-side potential of the economy and in this Channel 4 news video, the CEO of British Airports Authority argues that Heathrow is now full to bursting. The Conservative and Liberal Democrat coalition manifesto in 2010 ruled out a third runway at Heathrow - to the relief of those (including me) who live under Heathrow flight paths. But without much needed investmnt in air transport, there are fears that UK business will suffer and the economy will become less attractive to inward investment.

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A return to Glass-Steagall to prevent another crash? A lesson from economic history.

Friday, February 17, 2012

At the World Traders’ Tacitus lecture last night, Terry Smith proposed a return to the provisions of the Glass-Steagall Act in order to reform the banking sector. The title of his lecture was ‘Is Occupy right?’, and while he clearly didn’t go along with some of the propositions of the Occupy movement, such as the imposition of a financial transaction tax, he did say that they have a serious point to make about the financial system.

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Unit 2 Macro: The UK Housing Market in 2011

Monday, December 26, 2011

This blog provides a chart-based overview of developments in the UK housing market in 2011. The housing industry has a big effect on macroeconomic variables such as output, employment and investment. Has there been a marked recovery in property prices, new housing starts and mortgage lending?

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What is the socially optimal level of concerts in Hyde Park?

Friday, December 23, 2011

It seems those fortunate enough to live next to Hyde Park are increasingly bothered by the negative externalities arising from the concerts put on there. This BBC article is a good illustration of the difficulties involved at arriving at a socially-optimal level of production.

Unit 1 Micro: Empty Housing and Economic Efficiency

Thursday, December 15, 2011

Housing Starts

Channel 4 recently focused on the causes and effects of the hundreds of thousands of empty homes in the United Kingdom. Why is it given persistent shortages of affordable housing that perhaps a million homes lie empty and unused whilst an estimated two million families are in severe housing needs. New housebuilding has collapsed and in Britain we are building 100,000 fewer new houses every year than we need just to keep up with the changing mix of households and demographic change.

An interesting exercise is to show students some of the Channel 4 Campaign videos and then get them to put together policy ideas as to how to reduce the volume of empty homes and reduce the length of housing waiting lists.

Links to some of the Channel 4 videos can be accessed below:

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Chinese inward investment in the London property market

Sunday, June 12, 2011

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.

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Regulation, legislation and competitiveness - The Bribery Act

Thursday, May 05, 2011

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.

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Challenges facing the London Economy

Saturday, February 12, 2011

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:

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