Autumn 2022 Newsletter


Going after greenwashing

How can consumers and investors tell if a green claim is genuine or not? Greenwashing is making false or misleading environmental claims about your products or services to improve your green credentials. Greenwashing can be difficult to call out, but things may be getting easier as authorities are cracking down on big firms. The UK’s Competition and Markets Authority has promised to investigate firms’ green claims and is currently reviewing well known fashion brands ASOS, Boohoo and Asda. In the US, Swedish firm H&M is being sued for alleged false green claims and recently Deutsche Bank offices in Germany were raided by police over greenwashing allegations. Look out greenwashers!

Is our debt sustainable?

Governments had to borrow a lot to fund their spending during the Covid pandemic. UK Government debt was around 96% of GDP or £2,427 billion in August 2022. Is that sustainable? High inflation and rising interest rates are making it less so. In the UK, debt interest payable was £8.2 billion in the month of August alone, the highest August figure since at least 2007. This partly reflects the fact that around one quarter of UK government debt is index linked to the Retail Price Index – a measure of inflation. So as inflation rises so do the costs of servicing that debt. With government debt likely to increase further because of the energy price cap, borrowing costs on the up and inflation-linked bonds becoming more expensive to service, an increasing share of the government’s budget will need to be allocated towards servicing its debt. To pay for this, taxes need to be raised and/or other spending cut, or we will have to borrow even more. Expect debt
sustainability to play a greater role in the policy debate again in the future.

Funding government spending – who should pay?

Sustainability is one side of the coin, equity the other. The explosion in European energy prices in the wake of the Russian invasion in Ukraine has led to a massive policy response. Most countries face similar challenges and have broadly come up with similar policy responses involving financial support to households and businesses to help pay the bills and price ceilings on energy. As a result, the public finances have been blown of course yet again. But who is to pay for these measures? It will mainly be the future taxpayer – our alter egos
in decades to come and new generations yet to be born.
What about energy companies though? Here countries are taking different approaches. The EU has announced a windfall tax on energy companies to help pay the bills, by contrast the new UK government argues that it should not intervene in market outcomes in such a way. You can argue the merits yourself. What might be worth remembering though is that the underlying cause of the energy price explosion was the market intervention in the shape of unprecedented economic sanctions on a major trading partner.

Competition and big tech

There is also plenty going on for those interested in microeconomics, market structures and competition. In the UK, the Competition and Markets Authority will investigate Microsoft Corporation’s proposed purchase of Activision Blizzard, the maker of the popular game Call of Duty, on the grounds of competition concerns. Microsoft is one of the top three games producers globally. Meanwhile, way back in 2018 the European Commission accused Google of imposing unlawful restrictions on manufacturers of Android mobile devices and mobile network operators with the aim of consolidating the dominant position of its search engine. Google has now lost its legal challenge and might have to pay more than €4bn in fines as a result. Other regulators are keeping a close eye on these developments.

Upcoming events and courses

Courses are currently delivered both online and in person. SPE Courses are run by economicsense on behalf of the Society of Professional Economists.

SPE Courses Cost-benefit analysis with applied example 9.30am–12.30pm 27th, 28th and 29th
September 2022

This course is ideal for analysts wanting an overview of cost-benefit analysis. This course is run online over three half days. The third session brings the theory to life with an applied example conducted in excel. To book: Cost-Benefit Analysis with Applied Example.

Strategic Career Development for Analysts 10am-1pm 5th, 12 th October, and 14th December 2022

This course is designed to support strategic career development for experienced analysts. Whether you are considering promotion, looking to deepen your knowledge as an expert in your analytical field or simply deciding what to do next, the course will provide you with tools to develop a fulfilling career. This course is run online. To book: Strategic Career Development for Analysts.

SPE Courses Introduction to Green Finance 9am-1pm Monday 10th October 2022

The capital markets are playing an increasingly important role in facilitating the shift towards a low-carbon economy. This course gives participants an understanding of what Green Finance is, why it matters, and what the future might hold. No prior knowledge of economics or financial markets is required. This course is run online. To book: Introduction to Green Finance.

Cost-benefit analysis for non-economists 9.30am–12pm 14th 15th 16th November 2022

Ideal for government analysts (outside economics), and policy and finance professionals who are involved in
preparing and reviewing business cases and impact assessments. The course will give participants the skills to critique CBA analysis quickly and effectively. This course is run online. To book: Cost-benefit analysis for non-economists.

SPE Courses Macroeconomics refresher and update 10:00am–4pm 28th and 29th November

Professor Andy Ross returns for this popular two-day course run in person. The course sets out the key macro models in use today and relates them back to understanding key policy questions. To book: Macroeconomics – Refresher and Update.

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