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Showing posts from 2020

Trade, saving and an economic disaster

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 The UK is running a trade surplus. No, really, I am not joking. This is from the ONS's latest trade statistics release : The UK total trade surplus, excluding non-monetary gold and other precious metals, increased £3.8 billion to £7.7 billion in the three months to August 2020, as exports grew by £21.4 billion and imports grew by a lesser £17.5 billion It's the first time the UK has run a trade surplus since the late 1990s:  And if you were thinking this was because of the lockdown, you would be wrong. The UK has been running a trade surplus since the beginning of 2020: Admittedly, the trade surplus widened under lockdown. But the UK economy reopened to some degree from June to August - and yet the trade surplus continues to widen. This is no doubt music to the ears of balance of payments obsessives. Could the UK at last be pivoting away from a consumption-led growth model to an export-led one?  At first sight, it appears so. Exports have increased more than imports. And the s

A Financial View of Labour Markets

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We are used to thinking of workers as free agents who sell their labour in a market place. They bid a price, companies offer a lower price and the market clearing rate is somewhere between the two. Free market economics, pure and simple.  But actually that's not quite right. The financial motivations of workers and companies are entirely different. To a worker, the financial benefit from getting a job is an income stream, which can be ended by either side at any time. But to a company, a worker is a capital asset.  This is not entirely obvious in a free labour market. But in another sort of labour market it is much more obvious. I'm talking about slavery.  Yes, I know slavery raises all sorts of emotional and political hackles. But bear with me. I am only going to look at this financially. From a financial point of view, there are more similarities than differences between the slave/slaver relationship and the worker/company relationship - and the differences are not necessaril

Statistics for state pension age campaigners

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Another day, another takedown of claims made by women's state pension age campaigners. This time, it's figures for benefit claims by women in their early 60s. David Hencke claims that sharp rises in the number of women in this age group claiming unfit-for-work benefits (ESA and legacy incapacity benefits) proves that losing their state pension entitlement is wrecking the health of women in this age group. And he argues that this calls into question the DWP's recent victory in the Court of Appeal: The disclosure of these figures -obviously not available at the time of the hearing – does undermine the forceful case made by Sir James Eadie, QC, who represented the Department of Work and Pensions, that any poverty or ill health suffered by these women could not be linked to the rise in the pension age to 66. Unfortunately, it doesn't.   The figures released by the Commons Library on 18th September 2020 do indeed look damning. Here's an excerpt from their table, in whic

The inhumanity of Ofqual's algorithm

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 To everyone's relief, the Government eventually caved in over the awarding of grades to A/AS level and GCSE students who had not been able to take their exams. The algorithm that awarded aspiring young people grades they did not expect and did not deserve was discarded in favour of grades set by their schools and colleges. But only if the grades awarded were too low. Those to whom the algorithm awarded over-high grades got to keep them. As a result, the "rampant grade inflation" that the Education Secretary was so desperate to prevent is now even worse than it would be if only the centre-assessed grades were used. What a mess.  But it is not the current mess that bothers me, bad though it is. Nor even the mess there will probably be next year, when universities are faced with cramming next year's cohort into intakes already partially filled by deferrals from this year. No, it is what this algorithm tells us about the way officials at the Department of Education, OfQu

What went wrong at intu?

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In June this year, a company called intu (no capitalisation) collapsed. Most people had never heard of it. But they knew what it did. It was the owner of many of the UK's biggest shopping centres. Lakeside in Thurrock, Metro Centre in Newcastle, and the Trafford Centre in Manchester - all of these were owned by intu. Indeed, they still are. At the time of writing, no disposals have been made.  So intu is the landlord of a significant part of the UK's retail sector. And it is dead, killed by the pandemic.  But like many of those killed by the pandemic, intu had underlying health issues that made it especially vulnerable.  Long before the pandemic struck, the retail sector was in trouble. Over the last few years, a  stream of household names have gone to the wall: Woolworths, Toys R Us, Mothercare, Maplin, BHS, Comet, and numerous fashion retailers. The department store House of Fraser was bought by Mike Ashley, owner of the lean and hungry Sports Direct. Numerous other retailers

Britain was not "nearly bust" in March

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"Britain nearly went bust in March, says Bank of England", reads a headline in the Guardian . In similar vein, the Telegraph's Business section reports "UK finances were close to collapse, says Governor": Eh, what? The Governor of the Bank of England says the UK nearly turned into Venezuela? Well, that's what the Telegraph seems to think:  The Bank of England was forced to save the Government from potential financial collapse as markets seized up at the height of the coronavirus crisis, Governor Andrew Bailey has said. In his most explicit comments yet on the country's precarious position in mid-March, Mr Bailey said 'serious disorder' broke out after panicking investors sold UK government bonds in a desperate hunt for cash. It left Britain at risk of failing to auction off the gilts needed to fund crucial spending - and Threadneedle Street had to pump £200bn into markets to restore a semblance of order. Reading this, you would think that the UK