Over the past few months, a group of budding economists from the lower sixth have participated in a series of “extension” classes in preparation for application to various top universities. These lessons have covered a variety of topics ranging from international trade to game theory, aiming to test how far we can stretch our current knowledge of economics to more complicated topics and issues, as well to see how we can cope with completely new ideas.

Firstly, we began with looking at current issues with regards to global trade imbalances, mainly between the USA and China. This involved doing independent research into the topic to discover how such imbalances affect global economic stability. From this, the true extent of China’s role in the global economy was uncovered with the ‘rigging’ of their exchange rate and labour costs being a cause for concern within the group.

In addition to this topic, we also looked at game theory and its applications within economics. To do this, we participated in a number of so called ‘games’ and how they can be solved. For instance, we looked at the prisoner’s dilemma (included in the picture). With this, there are various different prison sentences for two people who have committed the same crime. If both plead guilty, the sentence is 3 years; if both plead guilty then the sentence is 2 years and so on.

To conclude the sessions, each member will read a book related to various fields of economics, ranging from financial markets to economic philosophy, everyone one of which will have a review posted on the business & economics blog so stay tuned!

Not sure the new financial year is as exciting as Tagu, the New Year in Burma. Not sure who I would be throwing water at, what with a higher tax bill and pension contributions.

On a more celebratory note, though, the new term marks a ‘New Year’ for the blogsite. It’s all been a bit quiet as the upper sixth focus on final A2 modules and we await news of who are our new subject prefects. Well January modules went swimmingly in economics (63% A* and 83% A* – A in the Global Economy unit) and not too bad either in business studies (50% A* and 63% A* – A in the Business Environment unit). On top of this, Stephen Lear (economics subject prefect) and Matt Burgess (business studies prefect) continued to blog, as well as hit the top grade in exams and, in Matt’s case, polish off an impressive Extended Project on Nation Branding. So, a big thank you to both Stephen and Matt on all they have done to launch what an FT researcher recently described as “a very impressive Economics and Business blogsite” (more on this below).

The Blogsite New Year heralds a new team headed by Mark Brownson (economics subject prefect) and Simon Edholm (business studies prefect). I am looking forward to working with both in the coming months and, I am sure, there will be a continuation of the fine standard set by the pioneers and just a few innovations too.

Talking of innovations, the New Year will see occasional contributions from FT researcher Adam Palin. Adam studied economics at King’s in the ‘Class of 2006′ and was a regular columnist for Ink., the termly departmental magazine. He went on to study economics and politics at Bath and last year took up an appointment as a researcher in the Business Education team at the Financial Times. He has kindly volunteered to contribute to the blogsite over the coming months. We hope to persuade fellow Ink. editor, now Editor in Chief and founder of SaveTheStudent.org, Owen Burek, to join Adam in contributing a few entrepreneurial words of wisdom. Watch this space.

In the spirit of Burma’s Tagu, time to celebrate fresh water and forget about the shortfall in the April pay packet. Apt, too, when I remember Adam’s march through the centre of Chester for WaterAid back in 2006!

An article in FT weekend looks at European legislation due to come into force in 2015.  The aim of the legislation, first presented in 2007, is to reduce the average car engine emission from the current average of 140g of CO₂ per kilometre to 130g.  To achieve this, a massive additional tax will be levied on “gas guzzlers”.  Particularly interesting is the FT’s suggestion that the well healed are unlikely to “flinch” if their Rolls Royce costs an extra €12,500 or if their Bugatti Veyron costs an extra €40,000!  Is the demand for the most exclusive cars price inelastic? What is absolutely certain is that a levy must be imposed unilaterally across the car industry, based purely on emissions to prevent distortions of the car markets of the rich.

So you’d better get off to yout local Aston dealership today!

If you wish to read more, click HERE!

An interesting article in last week’s Economist looks at whether Britain really can “rebalance” its economy with “exports at its heart”.  It looks at the Jaguar, Land Rover plant at Halewood as an example of what Britain can achieve.  The factory worked overtime during the Christmas holidays to keep up with export demand, and there is talk of expansion plans that will create 1500 new jobs.  In the year to November 2011 exports of cars to China rose by 23%, and to India by 67%.  Britain must “BRIC” it and look to the emerging markets of Brazil, Russia, India and China, and our well established trading partner the USA, to help us export our way out of recession.

At the moment, only 5% of our total exports go to the “BRIC” nations.  The USA imports more UK products than any other single country and judging by this month’s reduction in unemployment, the USA’s economy is recovering well.  These are the markets that the “Economist” says the UK should aim to supply.

The current situation of looking to Europe, which at present takes 52% of our exports is like being “shackled to a corpse” complains the conservative M.P. Douglas Carswell.  It asks whether Britain’s diminished manufacturing industry can respond quickly enough to lead our recovery.  To our advantage, however, the pound has devalued by nearly 25% since 2007 on a trade weighted basis and we have a government promising to remove “red tape” and promote manufacturing.  Now is the best chance, we will ever have to rebalance the economy.

Lets hope the government make the correct decisions to allow this to happen!

You can read more HERE.

 Kodak has filed for bankruptcy in a bid to survive a liquidity crisis after years of falling sales related to the decline of its namesake film business as digital cameras have taken over the market. (Guardian)

Fresh & Easy has been an expensive US road trip for Tesco, with the chain racking up losses of £700m since the first stores opened in the autumn of 2007. To date Tesco has ploughed more than £1bn into establishing the US venture (Guardian)

Workers at John Lewis are unlikely to strike over terms and conditions. Staff also receive employee perks – worth £70m this year – ranging from holiday homes to sailing clubs, theatre outings, theme park admissions, and even a choir, all subsidised. It also one of the dwindling number of companies to operate a final salary pension scheme which is funded entirely by the company (Guardian)

Inflation fell at the fastest rate in three years in December, to a six-month low of 4.2%, raising hopes that the squeeze on hard-pressed households’ living standards will start to abate in 2012.

Here are the 4 pictures for this week’s quiz. Entries to the blogteam via sdw@kingschester.co.uk or post your entry as a comment.

Winner is the first to identify all 4 stories.

With the recent inflation figures being released for December, a sharp fall from 4.8% to 4.2% suggests that Mervyn King’s predictions for the future of the UK economy are coming to life with last year’s spike in inflation followed by rapid decreases all seemingly occurring. So is it the time to celebrate?

Inflation is the increase in the general price level, as measured by the Consumer Price Index (CPI) and the Retail Price index (RPI). So surely a decrease in it is something to cheer for? This is obviously true for households, the constant complaints evident in supermarkets of how expensive everything is means that these could be over. However, we shouldn’t bring the champagne out just yet. With prices still increasing at a rate of 4.2%, this is much larger than the increase in wages so prices are still eroding consumers’ real income.

Being British, then, doom and gloom is still evident. Unemployment is continuing to rise and wage growth below inflation. And, of course, dear old Europe continues to find itself under increasing amounts of pressure. However, apparent stagnation of China’s economy, decline in global commodity prices and unemployment continuing to rise could mean that the rate of inflation is set to fall still further, a bonus for all consumers.

Royal Bank of Scotland confirmed on Thursday it would cut about 3,500 investment banking staff, in an overhaul of the unit. It had alreadymade about 2,000 investment bank job cuts in 2011. The plans bring staff cuts announced since mid-2011 or reported to be in the works to133,500 at major banks. (Guardian)

More than £4bn was wiped off the stock market value of Tesco on Thursday after Britain’s biggest retailer delivered its worst Christmas sales performance in decades and warned it would see “minimal” profits growth this year. (Guardian)

Fears that the US might ban imports of orange juice from Brazil drove orange juice futures to an all-time high on Tuesday as health regulators began testing all incoming shipments for traces of an illegal fungicide called carbendazim. Orange juice futures jumped almost 11% on the news. (Guardian)

The biggest leap forward in Britain’s rail network since the 19th century was announced on Tuesday with a £32.7bn investment in high-speed rail linking London with Birmingham, Manchester and Leeds. The HS2 high-speed rail scheme to be running by 2026 and completed by 2033, will almost halve some journey times between England’s biggest cities and make it significantly quicker to travel from the north of England and Scotland to London. (Guardian)

EDF Energy raised expectations of widespread cuts in household power bills from other “big six” firms by reducing its gas bills for 1.4 million customers by 5%. The move – to come into effect on 7 February– came on the day that an investigation by the consumer group Which? showed the top firms received 4m complaints last year. The next day, British Gas announced it was cutting its standard tariff by 5% with immediate effect and Scottish & Southern Electricity said it would reduce gas bills by 4.5% with effect from 26 March. (Guardian)

The company admits it misjudged the desire of its British customers for promotional discount coupons in these hard times and its underlying sales revenue consequently fell, when those of its main rivals either rose or flatlined.

Nearly £5bn was wiped off the company’s stock market value on Thursday after the supermarket juggernaut hit the wall during the peak selling season. The firm has broken 30 years of unchecked financial success with the shock warning that UK profits could fall in the coming year. The upset sent shockwaves through the City with the shares closing down 16% – thought to be its biggest one day tumble ever.

It wasn’t just the profits warning that inflicted a 16%, or almost £5bn, dent in Tesco’s stock market value. It was chief executive Philip Clarke’s admission that “long-standing business issues” must be addressed urgently. He is happy with Tesco’s prices, but that’s about all he can find to cheer. Quality, range and service must improve, he says.

These days Tesco’s rivals have copied Tesco’s tactics, such as how to use data from loyalty cards, and added a few of their own ideas. As Clarke put it, the competition unleashed a “barrage of coupons” over Christmas while Tesco stuck with its Big Price Drop campaign. The coupons won. Also Tesco’s leadership in non-food lines, such as clothing and electrical goods, now looks less of an advantage.

It will be interesting to see will be able to cope with their problems and still make their predicted £3.7bn profit. But will their future strategies be more successful than their recent one? Or is this the beginning of the end of Tesco’s dominance?

Here are the 5 pictures for this week’s quiz. Entries to the blogteam via sdw@kingschester.co.uk or post your entry as a comment.

Winner is the first to identify all 5 stories.