Top CO2 polluters and highest per capita

co2-emissions-per-capita

The biggest absolute emissions of CO2 come from China and the United States.

top 20 co2 polluters Source: World Bank CO2 emissions (kt)

In recent years, China has accelerated past the United States and is the biggest polluter in absolute terms, (which is unsurprising given China’s population and fast economic growth. India is also catching up.)

Biggest CO2 Polluters per capita

This measures the level of CO2 per person. Thus China with the highest CO2 in absolute terms is ranked considerably lower down.

highest-co2-polluters-per-capita The highest CO2 Polluters per capita are dominated by oil producing countries who refine oil and emit CO2 in the oil extraction and refining process.

Consumption-based emissions (trade adjusted)

It is worth bearing in mind that this data shows CO2 production in a country. CO2 by consumption would look different. For example, the UK is a net importer of CO2. In recent decades, the UK has reduced CO2 emissions per capita because manufacturing has declined and we import goods from other countries. In other words, CO2 emissions are produced elsewhere but the UK enjoy the goods.

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Freemium Business model explained

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Freemium is a business model where a firm gives away its product for free with the aim of later converting some users to the paid version. Freemium is different to a trial offer because the user can continue to use the free version for a prolonged period. Freemium is like an indefinite free trial.Dropbox is …

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UK Inflation Rate and Graphs

UK-CPI-Inflation

Current UK Inflation Rate

UK-CPI-Inflation

  • CPI inflation rate:  2.5% (headline rate) CPI – D7G7 at ONS
  • (page updated 17 August 2021)

Other measures of inflation

Reasons for low inflation in the UK

  • Low worldwide inflationary expectations. Europe is experiencing very low rates of inflation.
  • Fall in global inflation rates since 2007.
  • Reduced consumer spending due to Cvoid downturn
  • Weaker commodity price growth.

Inflation trends in the UK

uk-inflation-since-1970

Despite temporary cost-push inflationary factors in 2017, underlying inflationary pressures remain muted – at least compared to the past four decades.

The current UK inflation rate compares favourably to much of the post-war period.

1970s Inflation

The 1970s frequently saw double-digit inflation. This was due

  • Cost-push factors – rapid rise in oil prices
  • Rising wages due to powerful trade unions trying to keep up with living costs.
  • Lack of independent monetary policy
  • Inflation expectations rose

Late 1980s inflation

The inflation of the late 1980s was due to

  • Rapid economic growth ‘The Lawson Boom‘ – growth was above the trend rate causing supply shortages
  • Rise in house prices fuelling wealth effect
  • Lack of independent monetary policy. Policy was partly set by ‘shadowing the D-Mark’ which led to loose monetary policy in late 1980s

Inflation and wages

  • Real wages = nominal wages – inflation.
  • Usually, during a period of economic growth – wage growth is higher than inflation, this leads to positive real wage growth.
  • During the economic recession of 2009-13 – we had a prolonged period of negative real wage growth. Wages rising at a slower rate than inflation.
  • The end of 2014 saw the first signs of renewed wage growth and positive real wage growth.

wages-inflation-uk

Since 2008, there has been an unusual period of negative real wage inflation. (inflation higher than wage growth)

However, since the recovery from the Covid downturn, there has been a sharp increase in wages (likely to prove temporary)

See more at UK wage growth

Inflation since 1990

uk-inflation-1989-2021-

  • Inflation rose over 8% in the late 1980s due to the Lawson boom, which was a period of unsustainable economic growth.
  • Inflation was low in the period 1992 to 2007. This was a period known as the ‘great moderation’
  • The inflation of 2008 and 2012 was due to cost-push factors (devaluation and rising commodity prices)

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Does inflation cause unemployment?

lawson-boom-inflation-growth

Readers Question: Does inflation causes unemployment?

There are a few different scenarios where inflation can cause unemployment. However, there is not a direct link. Often we will notice a trade-off between inflation and unemployment – e.g. in a period of strong economic growth and falling unemployment; we see a rise in inflation – see Phillips Curve.

phillips-curve-arrow

Also, it is important to bear in mind, (especially in the current climate) If the economy has deflation or very low inflation and the monetary authorities target a modest rate of inflation, then this may help boost growth and reduce unemployment.

Inflation can cause unemployment when:

  1. The uncertainty of inflation leads to lower investment and lower economic growth in the long term.
  2. Inflationary growth is unsustainable leading to a boom and bust economic cycle.
  3. Inflation leads to a decline in competitiveness and lower export demand, causing unemployment in the export sector (especially in a fixed exchange rate).

Inflation creates uncertainty and lower investment

One argument is that a period of high and volatile inflation discourages firms from investing. Because inflation is high, firms are less certain investment will be profitable. It is argued that countries with higher inflation rates tend to have lower investment and therefore lower economic growth. Therefore, if there are poor levels of investment, this could lead to higher unemployment in the long term.

It is argued that countries with low inflation rates, such as Germany have enabled a long period of economic stability which helps to attain a long-term low unemployment rate. Low inflation in a country like Germany also helps them to become more competitive within the Eurozone, which also helps create employment and reduce unemployment.

See also: costs of inflation

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Foreign Direct Investment

world-foreign-direct-investment-fdi-global-1970-2021

Definition of Foreign Direct Investment (FDI). FDI is the net transfer of funds to purchase and acquire physical capital, such as factories and machines, e.g. Nissan, a Japanese firm, building a car factory in the UK. In recent years, foreign direct investment has also widened to include the purchase of assets and shares which give …

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UK wage growth

uk-real-wages-07-17

Wage growth is a key factor in determining living standards, aggregate demand and inflation. If wages increase faster than inflation, then households will be able to afford more goods and services. Real wage growth = nominal wage growth – inflation.

In the post-war period, apart from short-lived recessions, real wage growth has been positive, growing at a trend rate of roughly 2%

2008-14

This period was one of the longest periods of falling real wages. It was due to:

  • Great recession
  • Depreciation in Pound Sterling, raising price of imported goods
  • Rise in cost of living through rising energy/food prices.
  • Period of low-wage growth/low productivity

Research from the ONS stated that in 2012 real wages have fallen back to 2003 levels. (real wages fall)

Between 2014 and 2016, inflation fell and wage growth picked up. This led to positive real wage growth. The first sustained growth in real wages since pre-2007.

However, this is being over-turned by the depreciation of the Pound post-Brexit referendum and continued low-growth in nominal wages.

2020 onwards

The covid shock to the economy has led to volatile wage growth. With wages falling at the start of the crisis. Though the UK recovery has seen a shortage of some workers and rapid rise in wages.

Recent wage growth in UK

wages-inflation-with-arrows

Source: wages KAC3 – ONS (average weekly earnings) – | CPI inflation (D7G7) ONS

Until May 2008, wage growth was above inflation, causing positive real wage growth. But, since 2008, the UK has seen periods of negative real wage growth.

Wage growth since 2000

uk-real-wages-01-17

During the great moderation, we saw a steady period of rising real wages. This has been reversed since the prolonged recession of 2008 onwards.

Real disposable income per head

Real disposable income per head is income households have to spend after taxes and benefits. It is closely related to real wage growth but takes into account changes in taxes.

real-disposable-income-per-head Real Household income per head IHXZ at ONS

real-disposable-income-per-head-1999
Real disposable income per head since 1999.

Economic implications of recent wage trends

1. Muted inflationary potential. Some economists have worried that there is a risk of inflation from ultra-low-interest rates. During the great depression, we saw cost-push inflation, but this has evaporated because they were just temporary factors, such as rising oil prices, higher taxes e.t.c.

This shows the importance of wage growth for determining underlying inflationary trends. While wage growth remains low, there is muted potential for any long-term inflation.

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Economics without the boring bits – New book

I have written a new book “Economics Without the Boring Bits – An Enlightening Guide to the Dismal Science ” published by Wellbeck. It includes topics such as common economic fallacies, middlemen, recycling, debt, finance, trade, money, taxation and why some people get rich and others don’t. From the Introduction I have been teaching economics …

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