Newsletter Autumn 2020
Fortnite vs. Apple
You have likely heard of Fortnite – you might even be playing it. Fortnite’s parent company, Epic Games, and Apple recently locked horns over who should profit from in-app purchases. Should it be the producer – in this case Epic Games – or the platform owner, in this case Apple? Apple wants to defend its business model (a 30% cut on any purchase made on its store).
Fortnite says Apple is abusing market power. Fortnite is smaller than Apple but has some powerful backing, including Microsoft. Fortnite’s challenge could be the first battle in a long war over who will control software distribution, which could shape this key industry for decades to come. The courts will have a major say in this. Whose side are you on?
UK government debt has now hit £2 trillion making the UK’s ‘debt to GDP’ ratio around 100%. Chancellor Rishi Sunak commented ’we can’t sustainably live like this’. But what is ‘sustainable’ when it comes to public debt?
Truth is there is no magic answer. Former Chancellors have worried about much less: Gordon Brown, for example, was keen to keep debt below 40% of GDP while George Osborne pursued austerity when public debt rose above 60% after the Great Financial Crisis. But total government debt in Japan has been over 200% of GDP for many years and Covid-19 means the UK is not alone in experiencing rising public debt levels.
Fact is, you can borrow as long as someone is willing to lend to you. With lending to government often seen as “risk-free” this can be a very long time. Moreover, low interest rates now make it relatively cheap. But this could change quickly if a government lost its credibility in the financial markets – leading to higher perceived default risk – and borrowing could get much more costly. And of course, we have got to pay it back …
How to pay for Covid-19?
How and when to pay for Covid-19 spending has hit the headlines recently. See latest analysis by economicsense on ‘Policy options to reduce the debt-to-GDP ratio without austerity’ here: How to pay?
Care homes and Covid-19
I recently talked to Anita Charlesworth from The Health Foundation about the care sector and the impact of Covid-19. It is an important issue and a good example of applied economics. See: Anita Charlesworth video (external link).
Time for a trade deal
With just months left of the UK’s transition phase, we need to get new trade deals in place. Some agreements have been signed but many more are still in negotiation – including with the UK’s largest trading partner the EU. So why has the UK not signed more deals? Covid-19 chaos may have slowed things but more likely this is because negotiating trade agreements is a complex and lengthy process. For example, it took six years for the EU and Japan to negotiate their agreement and seven years for the EU and Canada to come up with CETA (Comprehensive Economic and Trade Agreement).
Cartel spotting – Cheating or Competing?
The Competition and Markets Authority (CMA) have launched a quiz on cartels – could you spot one? Have a go: https://cheatingorcompeting.campaign.gov.uk/ (external link)
Upcoming events and courses
All economicsense courses are now being delivered online. The courses are interactive, fun and you can learn from the comfort and safety of your own home.
Free online bite-sized events open to economicsense newsletter readers.
10am – 10.30am 9th October 2020
Covid-19 and the economy
Following the successful event in June find out how the economy is doing. Register here for free: Covid-19 free event.
1pm – 1.30pm 18th November 2020
Green Finance – What is Green Finance? How can it help us achieve environmental goals? Register here: Green finance free event.
Overview of cost-benefit analysis
1st October 2020
This course provides an introductory overview of cost-benefit analysis (CBA) suitable for economists. It is run by SPE Courses with Catherine Connolly and Ken Warwick as tutors. Booking via email to firstname.lastname@example.org or visit www.specourses.co.uk (external link)
Economics for non-economists
9.30am – 12pm on 4th, 5th and 6th of November
This course provides an accessible overview of economics. Topics will include market structure and competition, market failure and government failure. At the economy-wide level we will discuss growth, fiscal policy and monetary policy. There will be a special section on trade particularly useful for anyone working
on Brexit-related issues. To book: Economics for non-economists.
Strategic Career Development for G7 Analysts
10am – 1pm 4th and 11th December and 5th March 2021
This course is designed to support strategic career development for experienced analysts – suitable for professional economists, statisticians, social researchers, scientists and operational researchers at G7/E level. To book: Strategic Development.
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