Macroeconomics: UK economy, IB Economics

The cost of living crisis laid bare in the Observer: food, energy, broadband, mobile phone, car insurance and mortgage costs all examined.

I'm afraid that Brexit alone can't account for some of these increases: I suspect that the Competition and Markets Authority (CMA) will be pretty busy in the months ahead. The rises in car insurance, in particular, are out of sync with the rest of Europe by a remarkable degree. 

This article looks at the fact that BT are going to approach the government to help them provide low-cost broadband to the poorest members of society. They argue that such a move would cost £2bn, although critics point out that they have an obligation to offer this, and that they make profits that are comparable to this cost.

The Public Accounts Committee is of the view that the pledge to level up the digital divide between urban and rural areas is not going to be met. Given that the Prime Minister gave his word, this is far from surprising, although it does have adverse implications for the supply-side, UK productivity and inequality. 

Polly Toynbee argues that the latest promises regarding adult education, and skills, whilst impressive-sounding, won't do much to get people back into work. 

The notion of 'building back better' sounds impressive but if you look at the nature of the promises to roll out rural broadband, the Green Homes Grant, adult education and apprenticeships, then you might not be as convinced that they're going to have as much effect as has been trumpeted. 

Scoop! The government fails to achieve a stated target for infrastructure development, in this case, in relation to the roll out of fibre broadband. 

Research by the Social Market Foundation suggests that remote areas are particularly affected, and there are also concerns about the ability of Openreach to raise wholesale prices, impacting adversely on the price of broadband. 

AN interesting view of the shape of things to come, with the government pledging to upgrade broadband infrastructure, enhancing the UK's productive capacity. However, it has also been careful not to box itself in and commit to full fibre connection nor commit to a date for these advances.

This is an inequality issue - with a House of Lords Committee suggesting that digital exclusion is a major problem and that the government should try to do something to close this gap, not least because 90% of jobs are now only advertised online.

The policy that the recommend is in cutting VAT on low-cost broadband, and in trying to encourage those eligible for so-called social tariffs to use them. According to the article only 5% of the 4.3 million people eligible use them.

Of course, such a move would also enhance the nation's productive capacity too, boosting the supply-side.

And here comes inflation - with BT announcing that they are going to increase prices by 9.3% on 31 March, in line with their plan to impose annual March price increases of 3.9% plus inflation. 

Their justification is that data usage has dramatically increased, with a 90% increase in broadband data usage and a similar size increase in mobile phone data usage. 

Good news for Britain's supply-side, with faster rollout of high speed broadband.

However, to what extent is this a white elephant - how might you go about quantifying the gains from such an investment and how might the law of diminishing marginal returns apply?

And why are changes in tax policy so important in speeding up this investment. 

Another quite dull seeming story with many different issues to consider. The government has pledged to improve the nation's broadband quality, a supply-side boost if ever there was one. 

However, it is - unsurprisingly - likely to fail to hit its targets in this area, and you might argue about the returns to the investment too. Doesn't enhancing broadband capacity exhibit decreasing marginal returns? 

Well this is voter-friendly! The Labour Party have pledged to provide free broadband for all by nationalising the digital arm of BT - Openreach - and in doing so, hopefully act as a supply-side measure boosting productivity. 

However, it's controversial - not least because of the cost - but also because of concerns that there's little evidence that state ownership will increase economic efficiency. 

From a microeconomic perspective, there's also the question of what happens when something is provided 'free' - is there a possibility of broadband consumption becoming rivalrous

Fairly standard supply-side stuff - faster broadband equals higher productivity, right. 

Or more watching of cat videos on YouTube, perhaps