Usually I would have done multiple posts, but due to exams, I have decided to condense my take on the news to one post (albeit with not as much detail and research):
This week, Theresa May confirmed that there would be an expansion of Heathrow. This lead to Zac Goldsmith resigning as a Tory MP, only to stand independently. The third runway has become a divisive issue, so I thought I would summarise the key arguments for and against it.
Heathrow is one of the biggest airports in the world. It is currently operating at 98% capacity and in our increasingly globalised world, demand for air travel is increasing and only going to increase. Therefore we need another airport. So why not make a major airport in the north? Well simply, there isn’t demand. Even Stanstead doesn’t operate at capacity. A third runway in Heathrow would also apparently bring the most jobs and growth to the region.
Heathrow is more expensive than Gatwick as an option. Costing over £18 billion (twice as much as Gatwick), it does seem the inefficient choice. However, the third runway is expected to contribute £7billion a year to GDP, so will repay on itself over time. Of course, there are other factors. It is claimed that pollution deaths will increase as will noise pollution. There is also an argument about increased traffic around the area as a result, although this would likely be mitigated by the congestion zone charges in London.
An airport anywhere isn’t wonderful, however in terms of economic benefit, Heathrow probably is the best option and an airport is required in the London area. I do agree that in the long term, we need to find an eco-friendly alternative to aeroplanes. This effort should start by removing parts of subsidies off the cost of flying.
The big news to come out today in economics was that Nissan, after talking to the Prime Minister, will be manufacturing two new car models in its branch in Sunderland. This is rather exciting. Unless she’s paying them off, there is little doubt in my mind that Mrs May told Nissan that she plans for the UK to remain in the single market.
Nissan were one the loudest companies when it came to remaining, stating that they would likely relocate should Britain not be part of the single market. As one of the largest employers in Sunderland, a leave stronghold, they were a key example of what may happen should we leave. May clearly plans to remain in the single market, or at least make a deal for manufactured goods.
Hopefully this will see the pound rebound and the fact that Nissan are staying in the UK will give firms who are considering relocating much more confidence to stay.
This week, apple announced a new series of “MacBook Pros”. As someone who doesn’t care for apple particularly, this didn’t bother me until I saw the prices. Apple are boosting all their prices by 20% to the United Kingdom (apart from the iPhone). The new MacBook will cost £1449 in the UK as opposed to £1232 in the UK. This price increase for an already expensive product shows many things.
The reason for the increase in price is the fall of the sterling. In a previous article, I discussed how the cost of items from abroard would increase and this is one of the clearest examples of this.
Another thing worth noting is the reaction to this. People in the UK haven’t said they would move to an alternative. They also won’t change their habits and buy British computers, therefore the arguments that British businesses would definitely receive a boost have been proven somewhat redundant. More money will just go abroard and worsen the trade deficit.
This news is braking as I’m writing it, but Uber drivers are now considered to be employees of Uber, meaning that they get sick pay, holiday and living wage. This is good for the workers and industry as it will hopefully stop Uber from forming a monopoly in the taxi business. A monopoly anywhere is bad as it is inefficient and can charge any price it likes. In London, the company has been controversial, taking business from the traditional black cab, but hopefully with equal regulations, the other taxi companies can come back and make the market competitive again.
The last issue on this weeks agenda is a bit of a fun one. This week sees the end of the Great British Bake Off. Channel 4 payed £75 million to commission this show, however didn’t consider that Mel, Sue and Mary wouldn’t join. This is an example of brand loyalty. Many fans of the bake off don’t like it for the cakes, but the community and feel and chemistry between Mel, Sue, Mary and contestants. Therefore Channel 4 will have lots of work to do to get the balance with new presenters (Just ask top gear). Maybe nest time Channel 4 should consider what people actually watch a show for and loyalty of people to companies.
Anyway, Candice won this year. She took risks throughout and most paid off. She was a very talented baker and deserved winner. However in my mind the real winner was Selasi. From week one, I was supporting him as I had his name in the sweepstake. Sadly he didn’t win, but nonetheless it was a very good series.
That is pretty much a summary of the week in terms of economics. Have a nice weekend.
Thanks to Ben for correcting my capitalising of MacBook Pro and correcting that iPhones will not increase in price.