Macroeconomics: UK economy, IB Economics

Larry Elliott seeks to draw out both the similarities and the differences between the price controls of the Heath government in the 1970s, and the attempt by the Sunak government to encourage supermarkets to reach a voluntary agreement to do the same in the present climate. 

Of course, a voluntary rather than statutory cap is clearly very different but many of the same problems still remain, not least the distortionary effect on the allocation of resources and the associated welfare loss. 

The Scotch whisky industry claims that US tariffs have cost it £500m in lost exports. Proof, if it were needed, that protectionism imposes costs, generates a welfare loss and, frankly, does little for any participant in trade. 

Really interesting little look at how the possibility of a no-deal Brexit has already started the process of trade diversion, as the UK's firms make their own preparations for a world where there isn't frictionless trade with Europe. 

Of course, the downside is that such a move is unlikely to be welfare enhancing. 

We had a lunchtime discussion about the CMA decision to block the proposed merger between Microsoft and Activision. We wondered whether there was an interesting microeconomic/macroeconomic trade-off.

Was it feasible that the CMA's decision was appropriate from a Microeconomic perspective, in that the merger could be anti-competitive and result in a welfare loss, but that the Macroeconomic consequences, in terms of reducing inward investment, and FDI in the tech sector could be worse than this. 

This article investigates this: there are some interesting bits of economics in here, not least the perception that "while Britain is a good place to start, it's a much harder place to scale up". 

The car industry and Brexit - not convenient bedfellows as this article highlights, with a no deal Brexit resulting in a 10% tariff on cars - increasing the price of the average car by £1,900 and an electric car by £2,800 all but eradicating the government's subsidy for buying such vehicles.

Look at the cost of a 'no deal' Brexit to the Germans - extra tariffs of more than 3 billion euros. That's not just bad news for Germany but bad news for British consumers who want to buy German goods. And who gains? 

No-one. Really.