economics

Cherry picking of data

Cherry picking of data

Cherry picking of data means we look for particular data and statistics that help to illustrate our point of view. It can also mean we present data in a certain way which is more favourable to creating the impression we want. Even the same statistic can be presented in different ways to give a very different impression. How to portray the recent record of the UK government? Since 2013, the UK has one of fastest growth rates in Europe, averaging close…

Consumer confidence

Consumer confidence

Consumer confidence is the outlook that consumers have towards the economy and their own personal finance situation. This outlook can be optimistic (high consumer confidence) or pessimistic (low consumer confidence) The level of consumer confidence will be an important factor that determines the willingness of consumers to spend, borrow and save. A high level of consumer confidence will encourage a higher marginal propensity to consumer. A fall in levels of consumer confidence is often an indicator of an economic downturn. Factors that affect consumer confidence House prices – A form of…

The importance of economics

The importance of economics

Readers question: What is the importance of economics? Economics is concerned with the optimal distribution of resources in a society. The subject involves Understanding what happens in markets and the macro-economy. Examining statistics about the state of economy and explaining their significance Understanding different policy options and evaluating their likely outcomes. Examples of the importance of economics Dealing with a shortage of raw materials. Economics provides…

Relationship between stock market and economy

Relationship between stock market and economy

Readers Question: What’s the relationship between a countries economy and it’s stock market? Is it always true that the stock market reflects a country’s economic conditions? Generally speaking, the stock market will reflect the economic conditions of an economy. If an economy is growing then output will be increasing and most firms should be experiencing increased profitability. This higher profit makes the company shares more attractive – because they can give bigger dividends to shareholders. Dow Jones industrial average Dow…

The great recession 2008-13

The great recession 2008-13

The great recession refers to the economic downturn between 2008 and 2013. The recession began after the 2007/08 global credit crunch and led to a prolonged period of low/negative growth and rising unemployment. In particular, the great recession highlighted problems within the Eurozone leading to a double dip recession and higher unemployment. This shows the sharp fall in real GDP in the UK economy in 2008 and 2009. It was also the slowest recovery on…

Economic record of Osborne and Cameron – 2010-2016

Economic record of Osborne and Cameron – 2010-2016

How to judge George Osborne’s and David Cameron’s economic record since May 2010? They inherited an economy recovering from a deep recession, high unemployment and large budget deficit. It was a difficult economic circumstance, but at the same time you might expect a strong economic recovery as there was much unused capacity and potential for economic growth. The chancellor and supporters will point to a stronger economic recovery than Europe, falling unemployment and a large reduction in the budget deficit. His critics will argue the austerity of 2010-12 was unnecessary – causing…

Collusion – meaning and examples

Collusion – meaning and examples

In economics, collusion occurs when rival firms agree to work together, e.g. setting higher prices in order to make higher profits. Collusion usually involves some form of agreement to seek higher prices. This may involve: Agreeing to increase prices faced by consumers. Deals between suppliers and retailers. For example, vertical price fixing e.g. retail price maintenance. Monopsony pricing – where retailers collude to reduce the amount paid to suppliers. Collusion between existing firms in industry to exclude new firm from…

Optimism post-Brexit

Optimism post-Brexit

As a general rule, I try to avoid politics. But, this summer has not been your typical British summer. Yes, the weather has been typically wet and miserable, but the political and economic climate has changed at a speed, not even found in a Jeffrey Archer novel. I started the referendum campaign a somewhat reluctant ‘Remainer‘ – aware of the failings of the EU, but dutifully reporting the economic benefits. As the campaign wore on I became more passionate…