The OFT has fined 9 companies a total of £50m for price fixing of dairy products in 2002 to 2003. Arla, Asda, Dairy Crest, McLelland, Safeway (now Morrisons), Sainsbury's, Tesco, The Cheese Company and Wiseman are the dairy producers/supermarkets involved who fixed the price of milk, cheese, butter and other dairy products.
This is a good case study to mention in the exam to discuss why firms would want to engage in collusive agreements (see cartel although this isn't necessarily a cartel, it displays characteristics) and the effectiveness of regulatory bodies in protecting consumers against anti-competitive practices.
Wednesday, 10 August 2011
UK Economic Growth
Yesterday it was announced that the US Federal Reserve (Central Bank) will keep US interest rates at 0.25% until at least mid 2013. It has been 0.25% since December 2008 and the main reasoning behind this is to try and prevent the US economy from undergoing a double dip recession. Because of this, the Bank of England are likely to keep interest rates in the UK 0.5% until the end of the year. See article for more and watch the video for what Mervyn King (Governor of the Bank of England) had to say.
There are fears that many major economies may face double dip recessions and this risk is heightened by the turmoil in the EU which poses great risk to the UK economy in terms of the banking system and how it will affect UK banks. Furthermore, the rate of inflation is likely to increase to 5% or higher at some point this year before dropping down, affecting disposable incomes and thus decreasing consumption.
There are fears that many major economies may face double dip recessions and this risk is heightened by the turmoil in the EU which poses great risk to the UK economy in terms of the banking system and how it will affect UK banks. Furthermore, the rate of inflation is likely to increase to 5% or higher at some point this year before dropping down, affecting disposable incomes and thus decreasing consumption.
Word of the Day
Recession
A fall in national output (GDP) for 2 successive quarters or more. Recessions in the UK: 1980, 1990 and 2008 lasting two years or less.
A fall in national output (GDP) for 2 successive quarters or more. Recessions in the UK: 1980, 1990 and 2008 lasting two years or less.
Tuesday, 9 August 2011
Word of the Day
Stagflation
A situation in which output is falling and inflation is rising. Unemployment is high. Some economists say that the period we were facing earlier this year was a period of stagflation because economic growth was barely above 0% and the rate of inflation was double the government's target.
A situation in which output is falling and inflation is rising. Unemployment is high. Some economists say that the period we were facing earlier this year was a period of stagflation because economic growth was barely above 0% and the rate of inflation was double the government's target.
Monday, 8 August 2011
Word of the Day
Relative poverty
Someone is in relative poverty when their incomes are rising at a lower rate than everyone else's. A more formal definition is, if someone is in relative poverty, their income is below a specified proportion of average household incomes (below the average incomes of the population).
Someone is in relative poverty when their incomes are rising at a lower rate than everyone else's. A more formal definition is, if someone is in relative poverty, their income is below a specified proportion of average household incomes (below the average incomes of the population).
Many students will "never pay back loans"
An article published this morning warns that many students will not be able to pay back their student loan regardless of whether you are being charged £6000 or £9000 for your university course. If you think you will be worse off having fees of £9000 rather than £6000 per year, then you may be wrong. This is because after 30 years your debt is written off and you still would not have finished repaying your full debt by this time.
Martin Lewis, from MoneySavingExpert, calculated that if a graduate starts earning £30,000, then the debt of fees of £6000 per year will remain unpaid. If a graduate starts earning £40,000 after graduation, the graduate will pay back their fees of £6000 per year in 24 years. This means that students that start earning £30,000 will never pay back their debt, no matter what their fees. And the likelihood of graduates paying back fees of £9000 is very low.
Whether you have to pay your £6000 fees or £9000 fees, the monthly repayments remain the same. You will have to pay 9% of everything over £21,000 and this increases as you begin to earn more. In some ways, I suppose it is a good thing that you are not debt burdened for the rest of your life (with your student loan fees that is!) and there is a chance that you never have to pay back all the money you owe. But unfortunately, you still have to pay more than the preceding years.
This article can provide thought for the law of unintended consequences. Ask yourself though, how can the government not have calculated how many debts will remain unpaid?
Martin Lewis, from MoneySavingExpert, calculated that if a graduate starts earning £30,000, then the debt of fees of £6000 per year will remain unpaid. If a graduate starts earning £40,000 after graduation, the graduate will pay back their fees of £6000 per year in 24 years. This means that students that start earning £30,000 will never pay back their debt, no matter what their fees. And the likelihood of graduates paying back fees of £9000 is very low.
Whether you have to pay your £6000 fees or £9000 fees, the monthly repayments remain the same. You will have to pay 9% of everything over £21,000 and this increases as you begin to earn more. In some ways, I suppose it is a good thing that you are not debt burdened for the rest of your life (with your student loan fees that is!) and there is a chance that you never have to pay back all the money you owe. But unfortunately, you still have to pay more than the preceding years.
This article can provide thought for the law of unintended consequences. Ask yourself though, how can the government not have calculated how many debts will remain unpaid?
Beyond the crisis: lessons for the future of the eurozone
Great lecture at the LSE on 7th September. A ticket must be requested on 31st August if you want to attend. Please consider going if you want to learn more about the Eurozone crisis. Lecture is conducted by Herman Van Rompuy, Prime Minister in Belgium from 2008 to 2009. More information found on the LSE website.
Hope to see you there!
Hope to see you there!
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