Thursday, March 29, 2007
Complacency puts jobs in car industry at risk, warn MPs
Britain's motor industry risks haemorrhaging jobs overseas unless the government and companies commit to improving skills and to research and development,a parliamentary inquiry warns today. The Commons trade and industry committee report recommends that government "review whether the UK is really still at the forefront of innovative design and technology in the automotive sector, or whether research facilities are being used for work to support technological developments elsewhere in the world". Global overcapacity in car manufacturing is pushing producers to shut plants or shift capacity to lower-cost centres in eastern Europe or Asia. The UK industry is seen as especially vulnerable because of its location and the fact that all its traditional brands are now foreign-owned.
Read the full story at: http://www.ft.com/cms/s/261552c4-dd93-11db-8d42-000b5df10621.html
Much debate has taken place in the UK in recent years regarding the so-called ‘skills gap’ of the country relative to its trading partners (e.g. Germany, France etc), namely the fact that British workers do not posses the set of necessary skills required to keep up with modern technological advances in industry, in particular, and the economy, in general. For this reason, economists have claimed that more emphasis should be given to the provision of vocational training by companies.
The much acclaimed new interactive learning package LiveEcon can help you undertand the economics behind these important policy events. For instance, Chapter 16 at intermediate level illustrates the effect of changes in H on the 'labour supply’ and ‘aggregate supply curves’ of the economy. In addition, Chapter 17 integrates H into the Solow growth model. Find out how to get LiveEcon at http://www.liveecon.com/. Dowload this blog as a Blogcast via the website.
Britain's motor industry risks haemorrhaging jobs overseas unless the government and companies commit to improving skills and to research and development,a parliamentary inquiry warns today. The Commons trade and industry committee report recommends that government "review whether the UK is really still at the forefront of innovative design and technology in the automotive sector, or whether research facilities are being used for work to support technological developments elsewhere in the world". Global overcapacity in car manufacturing is pushing producers to shut plants or shift capacity to lower-cost centres in eastern Europe or Asia. The UK industry is seen as especially vulnerable because of its location and the fact that all its traditional brands are now foreign-owned.
The report, sparked by MG Rover's collapse in 2005, was broadened to examine the competitiveness of the UK motor industry as a whole after France's Peugeot Citroën announced the closure of its Ryton plant near Coventry last year and General Motors' Vauxhall Motors said it would cut a shift at its Ellesmere Port factory.
It expresses concern over Peugeot's claims about UK labour costs and the "more predictable" wage disadvantage relative to eastern Europe. "We recommend that government study this potentially significant claim to see whether there is such an incentive to cut manufacturing jobs in the UK," the report says.
It expresses concern over Peugeot's claims about UK labour costs and the "more predictable" wage disadvantage relative to eastern Europe. "We recommend that government study this potentially significant claim to see whether there is such an incentive to cut manufacturing jobs in the UK," the report says.
Read the full story at: http://www.ft.com/cms/s/261552c4-dd93-11db-8d42-000b5df10621.html
The stock of human capital (H), the amount of knowledge and skills embodied in a country’s active population, is the most important determinant of the quality of the economy’s labour supply. An increase in H is expected to reduce production costs, other things equal, thus allowing firms to retain a competitive advantage in the face of the intense globalisation of economic activity. The stock of H is also considered by the so-called new endogenous growth theory to constitute one of the main determinants of sustained economic growth.
Much debate has taken place in the UK in recent years regarding the so-called ‘skills gap’ of the country relative to its trading partners (e.g. Germany, France etc), namely the fact that British workers do not posses the set of necessary skills required to keep up with modern technological advances in industry, in particular, and the economy, in general. For this reason, economists have claimed that more emphasis should be given to the provision of vocational training by companies.
The much acclaimed new interactive learning package LiveEcon can help you undertand the economics behind these important policy events. For instance, Chapter 16 at intermediate level illustrates the effect of changes in H on the 'labour supply’ and ‘aggregate supply curves’ of the economy. In addition, Chapter 17 integrates H into the Solow growth model. Find out how to get LiveEcon at http://www.liveecon.com/. Dowload this blog as a Blogcast via the website.
Thursday, March 22, 2007
U.S. Initial Jobless Claims Declined 4,000 Last Week
First-time claims for jobless benefits in the U.S. unexpectedly fell last week to the lowest in more than a month, signaling strength in the labor market. Initial jobless claims fell by 4,000 to 316,000 in the week ended March 17, the fewest since Feb. 3, the Labor Department said today in Washington. The total number of people collecting benefits dropped to the lowest in almost two months.
Federal Reserve policy makers yesterday kept the benchmark interest rate at 5.25 percent and repeated a forecast that the economy will probably expand ``at a moderate pace'' in coming months. ``There hasn't been much change in layoff conditions,'' said Michelle Girard, a senior economist at RBS Greenwich Capital in Greenwich, Connecticut. ``There is more than enough labor demand to keep the labor market tight.''
The unemployment rate fell to 4.5 percent last month, approaching the five-year low 4.4 percent reached in October.
Read the full story at: http://www.bloomberg.com/apps/news?pid=20601068&sid=aGB7_hZ8RK4c&refer=economy
Equilibrium in the labour market is determined by the interaction of the demand for labour by firms and the supply of labour by individuals. Robust economic growth is expected to contribute to a continuation in the pace of hiring by firms, thus affecting the labour demand curve of the economy. Note, however, that high levels of ``resource utilization,'' which are reflected by the low jobless rate, pose a risk that inflation pressures will develop in the future.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, Chapter 7 provides an introduction to the issues of employment and the implications for inflation. Chapter 16 also discusses the Phillips Curve in detail at an intermediate level. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
First-time claims for jobless benefits in the U.S. unexpectedly fell last week to the lowest in more than a month, signaling strength in the labor market. Initial jobless claims fell by 4,000 to 316,000 in the week ended March 17, the fewest since Feb. 3, the Labor Department said today in Washington. The total number of people collecting benefits dropped to the lowest in almost two months.
Federal Reserve policy makers yesterday kept the benchmark interest rate at 5.25 percent and repeated a forecast that the economy will probably expand ``at a moderate pace'' in coming months. ``There hasn't been much change in layoff conditions,'' said Michelle Girard, a senior economist at RBS Greenwich Capital in Greenwich, Connecticut. ``There is more than enough labor demand to keep the labor market tight.''
The unemployment rate fell to 4.5 percent last month, approaching the five-year low 4.4 percent reached in October.
Read the full story at: http://www.bloomberg.com/apps/news?pid=20601068&sid=aGB7_hZ8RK4c&refer=economy
Equilibrium in the labour market is determined by the interaction of the demand for labour by firms and the supply of labour by individuals. Robust economic growth is expected to contribute to a continuation in the pace of hiring by firms, thus affecting the labour demand curve of the economy. Note, however, that high levels of ``resource utilization,'' which are reflected by the low jobless rate, pose a risk that inflation pressures will develop in the future.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, Chapter 7 provides an introduction to the issues of employment and the implications for inflation. Chapter 16 also discusses the Phillips Curve in detail at an intermediate level. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Brown cuts basic tax rate by 2p
Chancellor Gordon Brown announced a cut in the basic income tax rate from April 2008 in a surprise move at the end of what is likely to be his last Budget. But his decision to scrap the lower 10p tax rate and raise National Insurance thresholds means few will be better off - and prompted claims of a "con trick".
Read the full story at: http://news.bbc.co.uk/1/hi/uk_politics/6472999.stm
A fall in the rate of income tax will increase disposable income, thus increasing consumption and hence GDP. It may also have important supply side effects in improving the incentives to work (rather than, for example, claim benefits), all other things equal. However, in this case, because other taxes have been raised and tax thresholds altered, for most people disposable income will overall be unchanged. Thus the effect will be relatively neutral. Many commentators see the fall in the headline rate of tax as a pre-emtive strike against the Conservatives, who have traditionally regarded low-tax as their territory, in the run-up to the next general election.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. The effect of a change in income tax is detailed in chapters 4 and 9/10/14 (at principles and intermediate level, respectively). Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Chancellor Gordon Brown announced a cut in the basic income tax rate from April 2008 in a surprise move at the end of what is likely to be his last Budget. But his decision to scrap the lower 10p tax rate and raise National Insurance thresholds means few will be better off - and prompted claims of a "con trick".
Read the full story at: http://news.bbc.co.uk/1/hi/uk_politics/6472999.stm
A fall in the rate of income tax will increase disposable income, thus increasing consumption and hence GDP. It may also have important supply side effects in improving the incentives to work (rather than, for example, claim benefits), all other things equal. However, in this case, because other taxes have been raised and tax thresholds altered, for most people disposable income will overall be unchanged. Thus the effect will be relatively neutral. Many commentators see the fall in the headline rate of tax as a pre-emtive strike against the Conservatives, who have traditionally regarded low-tax as their territory, in the run-up to the next general election.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. The effect of a change in income tax is detailed in chapters 4 and 9/10/14 (at principles and intermediate level, respectively). Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Tuesday, March 20, 2007
UK inflation rate rises to 2.8%
Inflation in the UK accelerated in February, raising the possibility of further interest rate rises.
On the Consumer Prices Index (CPI) measure, inflation in February was 2.8%, up from 2.7% the month before.
The figure - pushed up by increases in air passenger duty and thus air fares - remains well above the Bank of England's 2.0% target for the CPI. There was a bigger rise in the Retail Prices Index (RPI), which rose to 4.6% from January's figure of 4.2%.
"Today's figures are a timely reminder that the Bank of England's tightening work is probably not yet finished," said Rob Carnell, economist at ING.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6469747.stm
The increases in inflation has renewed speculation that the Bank of England may have to raise interest rates yet again, in order to curb consumer borrowing. The interesting issue this month is that recent tax hikes, such as the large increases in duties on air travel, which were required to help balance the government's budget, have themselves had negative consequences in increasing inflation - which in turn may trigger higher interest rates and higher wage claims.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, monetary policy is discussed in detail in chapters 5 and 11, and the operation of monetary policy is examined in chapters 6 (tutorial 3) and 11 (at principles and intermediate level, respectively). Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Inflation in the UK accelerated in February, raising the possibility of further interest rate rises.
On the Consumer Prices Index (CPI) measure, inflation in February was 2.8%, up from 2.7% the month before.
The figure - pushed up by increases in air passenger duty and thus air fares - remains well above the Bank of England's 2.0% target for the CPI. There was a bigger rise in the Retail Prices Index (RPI), which rose to 4.6% from January's figure of 4.2%.
"Today's figures are a timely reminder that the Bank of England's tightening work is probably not yet finished," said Rob Carnell, economist at ING.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6469747.stm
The increases in inflation has renewed speculation that the Bank of England may have to raise interest rates yet again, in order to curb consumer borrowing. The interesting issue this month is that recent tax hikes, such as the large increases in duties on air travel, which were required to help balance the government's budget, have themselves had negative consequences in increasing inflation - which in turn may trigger higher interest rates and higher wage claims.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, monetary policy is discussed in detail in chapters 5 and 11, and the operation of monetary policy is examined in chapters 6 (tutorial 3) and 11 (at principles and intermediate level, respectively). Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Thursday, March 15, 2007
Record US trade deficit in 2006
The US current account deficit jumped by 8.2% to a record $856.6bn (£444bn) in 2006, official figures show. The annual figure represented 6.5% of US gross domestic product in 2006, up from 6.4% in 2005. The deficit for 2006 meant the US was borrowing more than $2bn daily to finance its trade gap. The US has so far financed its expanding current account deficit through foreign demand for US Treasury securities, particularly from Japan and China.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6450565.stm
The current account is the broadest measure of trade, covering goods and investment flows between countries. A country that runs a current account deficit (i.e. it imports more from the rest of the world (RoW) compared to what it exports) finances this gap by running a capital account surplus. In other words, it borrows money from abroad by selling to foreign investors domestic financial assets (e.g. government bonds). Such capital flows eventually have implications for the determination of the value of the country’s exchange rate.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, Chapters 3 and 13 (at principles and intermediate level, respectively) describe the workings of the open economy, in general, and of the foreign exchange market in relation to the IS-LM-BP model, in particular. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
The US current account deficit jumped by 8.2% to a record $856.6bn (£444bn) in 2006, official figures show. The annual figure represented 6.5% of US gross domestic product in 2006, up from 6.4% in 2005. The deficit for 2006 meant the US was borrowing more than $2bn daily to finance its trade gap. The US has so far financed its expanding current account deficit through foreign demand for US Treasury securities, particularly from Japan and China.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6450565.stm
The current account is the broadest measure of trade, covering goods and investment flows between countries. A country that runs a current account deficit (i.e. it imports more from the rest of the world (RoW) compared to what it exports) finances this gap by running a capital account surplus. In other words, it borrows money from abroad by selling to foreign investors domestic financial assets (e.g. government bonds). Such capital flows eventually have implications for the determination of the value of the country’s exchange rate.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, Chapters 3 and 13 (at principles and intermediate level, respectively) describe the workings of the open economy, in general, and of the foreign exchange market in relation to the IS-LM-BP model, in particular. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
The UK economy will perform better than previously thought in 2007, the CBI has said, although it thinks interest rates will rise again soon.
The employers body is predicting growth of 2.9% in 2007, ahead of its previous 2.7% forecast. "The economy will enjoy better than expected growth this year as consumers continue to spend and businesses invest in their companies," said Ian McCafferty, the CBI's chief economic adviser.
The CBI expects the Bank of England to keep a "tight grip" on monetary policy despite an expected fall in inflation. It expects rates to rise soon to 5.5% and remain there throughout 2008.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6450787.stm
Strong consumer and business confidence appear to be underpinning very healthy growth projections in the UK. Consumption and investment are both key components of GDP, and hence growth in consumption and investment feed through into growth in GDP. Moreover, improvements in the investment rate push actual investment above break-even investment (the amount of investment needed to offset depreciation, for example), increasing the capital stock, and hence output in the long-run.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Chapter 8 also discusses the effect of investment on economic growth in the long run. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
The employers body is predicting growth of 2.9% in 2007, ahead of its previous 2.7% forecast. "The economy will enjoy better than expected growth this year as consumers continue to spend and businesses invest in their companies," said Ian McCafferty, the CBI's chief economic adviser.
The CBI expects the Bank of England to keep a "tight grip" on monetary policy despite an expected fall in inflation. It expects rates to rise soon to 5.5% and remain there throughout 2008.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6450787.stm
Strong consumer and business confidence appear to be underpinning very healthy growth projections in the UK. Consumption and investment are both key components of GDP, and hence growth in consumption and investment feed through into growth in GDP. Moreover, improvements in the investment rate push actual investment above break-even investment (the amount of investment needed to offset depreciation, for example), increasing the capital stock, and hence output in the long-run.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Chapter 8 also discusses the effect of investment on economic growth in the long run. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Monday, March 12, 2007
Japan's growth rate picks up pace
Japan's economy, the world's second largest, has grown more quickly than many experts forecast, underlining its emergence from years of stagnation. The rate of growth was 1.3% in the three months from October to December, up from 1.2% in the previous quarter, Cabinet Office figures showed. On an annual basis growth was 5.5%, the quickest for three years. Japan's economy has turned around as consumers and companies have picked up spending and exports have increased.
But analysts said the latest growth figures were unlikely to prompt another rise in rates as concerns remained that that higher borrowing costs could stall the country's economic recovery. Politicians have asked the Bank of Japan (BOJ) not to rush to raise interest rates for fear that it would stop consumer and company spending in its tracks. Japan has only just increased its main borrowing cost from almost zero to 0.5%, the highest level in a decade.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6440761.stm
The growth of GDP in Japan has been fuelled by growth in two of the key components of GDP: consumption and exports. A rise in interest rates would depress both consumption and investment, and as these are both important components of GDP, would reduce growth of GDP. Since Japan's recovery is seen as being fragile, most commentators think that the BoJ will not raise interest rates and jeopardise the recovery.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Japan's economy, the world's second largest, has grown more quickly than many experts forecast, underlining its emergence from years of stagnation. The rate of growth was 1.3% in the three months from October to December, up from 1.2% in the previous quarter, Cabinet Office figures showed. On an annual basis growth was 5.5%, the quickest for three years. Japan's economy has turned around as consumers and companies have picked up spending and exports have increased.
But analysts said the latest growth figures were unlikely to prompt another rise in rates as concerns remained that that higher borrowing costs could stall the country's economic recovery. Politicians have asked the Bank of Japan (BOJ) not to rush to raise interest rates for fear that it would stop consumer and company spending in its tracks. Japan has only just increased its main borrowing cost from almost zero to 0.5%, the highest level in a decade.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6440761.stm
The growth of GDP in Japan has been fuelled by growth in two of the key components of GDP: consumption and exports. A rise in interest rates would depress both consumption and investment, and as these are both important components of GDP, would reduce growth of GDP. Since Japan's recovery is seen as being fragile, most commentators think that the BoJ will not raise interest rates and jeopardise the recovery.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Thursday, March 08, 2007
Most of US sees 'modest growth'
Some parts of the US reported slower economic growth in February, as firms battled the fallout of problems with the housing and auto industries. The contraction came as firms cut their inventories and consumers spent less. However, the Federal Reserve's Beige Book showed that most parts of the US experienced modest growth.
Most of the districts said that there was little change in prices, and that pay increases "generally remained moderate" despite the job market staying healthy in most parts of the country. Such observations indicate that inflation is not growing - good news for the Fed which is aiming to slow the economy enough to curb inflation but not enough to cripple economic growth.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6428707.stm
Falls in consumer borrowing and firm inventories, will depress GDP. Conversely, rises in consumer and investor confidence will tend to increase GDP. In some regions of the US, the latter is the case, and in other regions the former. Interest rate rises designed to cool growing areas may have adverse effects in areas not so well favoured. This points to an important policy dilemma in a monetary union.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Chapters 7 and 16 at principles and intermediate level, respectively, describe the workings of the labour market, in particular the link between wage and price inflation. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Some parts of the US reported slower economic growth in February, as firms battled the fallout of problems with the housing and auto industries. The contraction came as firms cut their inventories and consumers spent less. However, the Federal Reserve's Beige Book showed that most parts of the US experienced modest growth.
Most of the districts said that there was little change in prices, and that pay increases "generally remained moderate" despite the job market staying healthy in most parts of the country. Such observations indicate that inflation is not growing - good news for the Fed which is aiming to slow the economy enough to curb inflation but not enough to cripple economic growth.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6428707.stm
Falls in consumer borrowing and firm inventories, will depress GDP. Conversely, rises in consumer and investor confidence will tend to increase GDP. In some regions of the US, the latter is the case, and in other regions the former. Interest rate rises designed to cool growing areas may have adverse effects in areas not so well favoured. This points to an important policy dilemma in a monetary union.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Chapters 7 and 16 at principles and intermediate level, respectively, describe the workings of the labour market, in particular the link between wage and price inflation. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Wednesday, March 07, 2007
Minimum wage up to £5.52 an hour
The national minimum wage is to rise by 17p - about 3% - from £5.35 to £5.52 an hour from October 2007. The rate for workers aged 18-21 will rise by 15p to £4.60 an hour, while workers aged 16 and 17 will get a 10p rise to £3.40 an hour. The increases will affect 1.3 million workers and are in line with inflation. The Trade and Industry Secretary, Alistair Darling, rejected a recommendation that 21-year-olds should receive the full adult rate of £5.52 an hour, saying that such a move could damage their job prospects.
Read the full story at: http://news.bbc.co.uk/2/hi/business/6425965.stm
The UK minimum wage was first introduced in 1999, amid concerns that such a move will jeopardise the employment prospects of the lower-paid segment of the workforce (e.g. young employees). This should occur because if the government arbitrarily imposes a national real wage that is higher than the one that equilibrates the labour market, then employers would find it costly to hire low-skilled labour.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 7 and 16 at principles and intermediate level, respectively, describe the workings of the labour market, in particular how the real wage (W/P) affects the supply and demand for labour. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
The national minimum wage is to rise by 17p - about 3% - from £5.35 to £5.52 an hour from October 2007. The rate for workers aged 18-21 will rise by 15p to £4.60 an hour, while workers aged 16 and 17 will get a 10p rise to £3.40 an hour. The increases will affect 1.3 million workers and are in line with inflation. The Trade and Industry Secretary, Alistair Darling, rejected a recommendation that 21-year-olds should receive the full adult rate of £5.52 an hour, saying that such a move could damage their job prospects.
Read the full story at: http://news.bbc.co.uk/2/hi/business/6425965.stm
The UK minimum wage was first introduced in 1999, amid concerns that such a move will jeopardise the employment prospects of the lower-paid segment of the workforce (e.g. young employees). This should occur because if the government arbitrarily imposes a national real wage that is higher than the one that equilibrates the labour market, then employers would find it costly to hire low-skilled labour.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 7 and 16 at principles and intermediate level, respectively, describe the workings of the labour market, in particular how the real wage (W/P) affects the supply and demand for labour. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Monday, March 05, 2007
IMF upbeat on UK economic growth
The UK economy will grow by 2.9% this year, the International Monetary Fund (IMF) has forecast.
Describing Britain's economic performance as "impressive", the IMF said it was revising up its 2007 growth projection for the UK from 2.75%.
However, the Washington DC-based institution warned that UK interest rates may have to rise further if wage settlements are not kept under control. Chancellor Gordon Brown, who is widely expected to take over from Prime Minister Tony Blair in the summer, last week imposed a tough pay settlement on public sector workers, with average pay increases rising by just 1.9%.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6421087.stm
The wage bill is part of any firm's costs. A rise in wages will, all other things being equal, push up a firms costs, and this will be passed on to consumers in the form of increased prices. Thus, there is a positive link between wage inflation and price inflation. A rise in inflation will trigger interest rate rises by the central bank, which will reduce economic growth. By imposing harsh wage discipline on the public sector, the Chancellor hopes to send a signal to the private sector to also show wage restraint.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 7 and 16 at principles and intermediate level, respectively, describe the workings of the labour market, in particular the link between wage and price inflation. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
The UK economy will grow by 2.9% this year, the International Monetary Fund (IMF) has forecast.
Describing Britain's economic performance as "impressive", the IMF said it was revising up its 2007 growth projection for the UK from 2.75%.
However, the Washington DC-based institution warned that UK interest rates may have to rise further if wage settlements are not kept under control. Chancellor Gordon Brown, who is widely expected to take over from Prime Minister Tony Blair in the summer, last week imposed a tough pay settlement on public sector workers, with average pay increases rising by just 1.9%.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6421087.stm
The wage bill is part of any firm's costs. A rise in wages will, all other things being equal, push up a firms costs, and this will be passed on to consumers in the form of increased prices. Thus, there is a positive link between wage inflation and price inflation. A rise in inflation will trigger interest rate rises by the central bank, which will reduce economic growth. By imposing harsh wage discipline on the public sector, the Chancellor hopes to send a signal to the private sector to also show wage restraint.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 7 and 16 at principles and intermediate level, respectively, describe the workings of the labour market, in particular the link between wage and price inflation. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Thursday, March 01, 2007
German jobless rate falls further
German unemployment continues to fall as improving economic prospects enable companies to hire more workers. Government figures showed the jobless rate falling to 10.1% in February, from 10.2% the month before. The upturn in the German economy in the past year, when growth levels hit a six-year high, resulted in a 826,000 fall in jobless numbers.
Strong domestic consumer demand has boosted companies' growth prospects. The improvement in German consumer spending, allied to a robust export market, has persuaded more firms to expand their workforces.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6404079.stm
Consumption is the largest component of aggregate expenditure. Rises in consumption, together with increasing exports, increase demand. The fall in unemployment is the supply side response to the increase in demand as firms take on new workers to meet that demand.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Chapter 7 and 15 (at principles and intermediate level, respectively) examine the supply side responses to demand shocks. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
German unemployment continues to fall as improving economic prospects enable companies to hire more workers. Government figures showed the jobless rate falling to 10.1% in February, from 10.2% the month before. The upturn in the German economy in the past year, when growth levels hit a six-year high, resulted in a 826,000 fall in jobless numbers.
Strong domestic consumer demand has boosted companies' growth prospects. The improvement in German consumer spending, allied to a robust export market, has persuaded more firms to expand their workforces.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6404079.stm
Consumption is the largest component of aggregate expenditure. Rises in consumption, together with increasing exports, increase demand. The fall in unemployment is the supply side response to the increase in demand as firms take on new workers to meet that demand.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Chapters 4 and 9 (at principles and intermediate level, respectively) describe the various components of aggregate demand and illustrate the determination of national income. Chapter 7 and 15 (at principles and intermediate level, respectively) examine the supply side responses to demand shocks. Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
