University Re-Application

I have just applied through UCAS for university entry to study economics ( and business economics ) in the year 2015. Please wish me luck !

Blog return

Hello all,

Currently studying history at Nottingham University , with 40 of my 120 credits being economics, which I have found hugely interesting . I am hoping to transfer to the full Economics BA course at Nottingham , or re-apply to study economics or business economics elsewhere.

In the meantime, I hope to continue updating this blog , having previously taken a sizeable hiatus following exams. The blog will continue to focus on business, finance and economics , with a post if the £250 million Tesco  profit forecast error due to be published very soon.

-Jack Blake

Lack of posts

Apologies for the lack of posts in the past week or so, I have been extremely with work. Service will now resume as usual and I will be posting several times a week throughout the christmas holidays. I would also like to extend a massive thank you for 2,000 page views !

U/E falling

Interesting news from the Independent which suggests an upturn in the fortunes of the UK economy :

"Britain's unemployment rate has slipped to a four-and-a-half year low of 7.4%, edging closer to the "threshold" at which the Bank of England has said it will consider raising interest rates.

The Office for National Statistics (ONS) said on Wednesday that unemployment in the three months to October was 2.39 million, or 7.4% of the working age population, down from 7.6% in the three months to September.

Under the Bank's policy of forward guidance, governor Mark Carneypromised that borrowing costs would remain on hold at least until unemployment has fallen below 7%.

When the policy was announced in August, the Bank's monetary policy committee expected that to take three years; but its latest prediction is that this could be as soon as 2015.

"The jobless rate is falling far faster towards the Bank of England's 7% threshold than policymakers envisaged when establishing the marker back in the summer," said Chris Williamson, chief economist at City data provider Markit. "Employment is surging higher and unemployment collapsing in the UK as the economic recovery has moved into a higher gear."

Sterling jumped after the unemployment data was released, rising by almost a cent against the dollar, to $1.635, as investors bet on an earlier-than-expected rate rise. A stronger pound was one of the concerns of the Bank's nine-member monetary policy committee at its December meeting, according to minutes also published on Wednesday.

The MPC pointed out that the value of sterling has risen by 9% against the currencies of the UK's major trading partners since March, and warned that "any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery".

The minutes suggested that the latest evidence pointed to a "burgeoning recovery" in the UK, but one which was unlikely to prove sustainable unless productivity picked up, finally lifting real incomes. The MPC voted unanimously to leave rates on hold at their record low of 0.5%, and the stock of assets bought under quantitative easing unchanged at £375bn.

MPC member Martin Weale suggested last week that if unemployment is falling rapidly at the point when the 7% threshold is breached, he would regard that as a reason to tighten policy.

The details of the jobs data reinforced the view that the labour market has strengthened markedly over the past six months. The number of people employed across the economy has hit a fresh record high above 30 million, while there are more vacancies than at any time since the summer of 2008, before the UK slipped into recession.

On the claimant count, which measures the number of people in receipt of out-of-work benefits, unemployment fell to 1.27 million in November, its lowest level since January 2009.

John Philpott, director of the Jobs Economist consultancy, described the data as "wonderful". "The quarterly 250,000 net increase in total employment is as big as one might once have expected in a full year. Employment is up in all parts of the UK, except Northern Ireland, with a sharp rise in job vacancies helping an additional 50,000 16 to 24-year-olds into work. And while the overall figure of more than 30 million people in work still leaves the UK employment rate (72%) below the pre-recession rate (73%) it is a landmark worth celebrating," he said.

Despite the improving conditions in the labour market, there is little evidence that the prolonged squeeze on wages is easing. The ONS said total pay rose at an annual rate of 0.9% in October, or 0.8% including bonuses. That compares with an inflation rate of 2.2% in the same month, suggesting that on average, living standards are continuing to fall. Frances O'Grady, general secretary of the TUC, said: "These are undoubtedly positive figures, but we should not forget how far we still have to go to restore pre-crash living standrards through better pay and jobs."

Rachel Reeves, the shadow work and pensions secretary, said: "Today's fall in unemployment is welcome, but families are facing a cost-of-living crisis and on average working people are now £1,600 a year worse off under this out-of-touch government."

Accounting for Growth

Just a quick post to let you know that I have been reading, and highly recommend , the book "Accounting for Growth" and terrysmithblog.com,  both of which by Terry Smith, head of Tullett Prebon  . They are  excellent reading for anyone with even a passing interest in Accounting, Finance or Economics.

Innovation stagnant

An interesting article was published on the Independent today regarding the lack of innovation within UK industry, largely as a result of a lack of capital. As one of last week’s posts following the festival of economics reported, only 0.35 % of banks’ overall assets were distributed to “innovative “companies, which is particularly revealing and pertinent to the article.

The basic premise is that innovation is not prospering within the current economy , largely due to a lack of funding from banks. The evidence behind this is strong and decisive:  A Grant Thornton study states that one third of London’s promising technology companies are missing out on growth due to a lack of capital. Despite promising government initiatives such as the SEIS raising £82 million from investors and helping 1100 small businesses , many of which being in the technology sector , the UK is ultimately lacking in the high-risk, high-reward, high-growth Venture Capital sector which helps to drive growth within the US economy, for example.

The reason that banks are hesitant to lend to small, risky companies is because they are just that: risky. As a result, banks are much more happy offering highly-collateralised loans to established companies or mortgages to people whose houses can be repossessed, whereas innovative new companies have value because of the ideas that drive them ; Not the assets which underline them. Of course, ideas are much more prone to failure and value fluctuation than tangible assets.

In my opinion, more government initiatives such as the SEIS should be created in order to help these ailing innovative companies, for, at the present state of bank lending, we will never be able to keep up with the heaps of innovation arising from areas such as America’s “Silicon Valley “. 

Gold depreciation

Whilst reading the Guardian today, I came across an interesting article which states that Gold is set to decrease in price, as demand from institutional investors switches to other assets such as stocks, which are now thought to offer better risk-adjusted returns. This is significant for a number of reasons : Firstly, this means that stocks are deemed to offer better risk-adjusted returns, which are broadly calculated by the asset’s beta rating. Furthermore, Gold is seen largely to be a safer alternative to stocks and derivatives. This is demonstrated by the following graphs showing Gold prices and the FTSE 100 index:

 Note the inverse relationship between Gold price changes and the FTSE index in the midst of the financial crisis and subsequent recession. As such, one can interpret the Gold depreciation as being ultimately a good indicator of economic recovery, or at the very least, increasing confidence.