As a follow-up to a recent journal entry on rising petrol prices, I found an article this morning that forcasted a possible very chilly winter for consumers. Analysts have warned that a 15 per cent increase in gas bills in the new year may be the result of higher wholesale gas prices. Suppliers such as Npower and British Gas are expected to start raising charges in February, while Russian gas giant Gazprom, which supplies a quarter of Europe's gas, announced last week that European consumers should expect prices to rise by almost a fifth.
Title: Cold comfort for gas customers with bills set to soar
Date: 12/02/07
Source: The Observer
Allan Asher, chief executive of consumer group Energywatch, thinks raising the prices is a scam. He accused the industry of 'tacitly colluding' to talk up the price of wholesale gas to justify charging higher rates. Tactics included exaggerating the possibility of cold weather or supply problems, he said. 'Warning of higher prices becomes a self-fulfilling prophecy. It's a way of softening the market ahead of a rise.' Also, it may be interesting to learn that in the past year, wholesale gas prices have fallen by 50 per cent, with wholesale electricity costs down by about 30 per cent. Yet utility bills have only fallen by a fraction of that amount. The average gas bill for an Npower customer is only 15 per cent less than a year ago and British Gas, the UK's the largest gas supplier, charges 20 per cent less than last year.
A spokesman for parent company Centrica said: 'British Gas intends to remain competitive as we have been all this year after leading the industry down in March and April.' Gazprom negotiates its annual gas export contracts in December. Two years ago it threatened to turn off the taps after gas negotiations with neighbouring Ukraine broke down, sending prices in Europe soaring.
Whether raising the gas prices is a scam or not, an increase in gas bills is going to happen. If it indeed happens to be a scam, I personally think its a shame to make consumers suffer just so the gas industry can soften the market ahead of a rise. If gas companies wanted to remain competitive, as British Gas intends to be, shouldn't they work to keep gas prices lower while all of the other companies raise their prices? That way more people would switch to their company therefore making them successfully competitive. On top of remaining competitive, everyone would benefit: consumers would be getting gas at a lower price and the gas company would still be able to soften the market without raising prices because of their increase in clientele. This method makes more sense to me rather than talking up the raise in wholesale gas prices to justify raising prices. Perhaps the increase in wholesale gas prices is more severe than I am making it out to be, but I just don't see the sense in increasing gas bills when it could be avoided.
Sunday 2 December 2007
Saturday 1 December 2007
12/01/07
Given that the European Union (EU) has been a major topic of discussion in our UK economy class, I found it very suiting to write a journal entry about a problem UK business leaders currently have with the EU. The Portuguese presidency of the EU is devising plans for a temporary and agency workers directive, which proposes that temporary workers, after just six weeks in a job, should be given the same pay and benefits as full-time staff, including pensions, sick pay and holiday entitlements. Worried that this will decrease the flexibility of the UK labor market as well as create obstacles to getting people back into work, British employers have called on Gordon Brown to stand firm against these attempts by the European Union. According to UK business leaders, temporary and agency workers should occupy the same job for at least six months and not six weeks before being given the same rights as their full-time colleagues.
Title: Employers attack EU workers’ rights plan
Date: 12/01/07
Source: Financial Times
Apparently, British employers are not alone in their disapproval of the proposed directive. David Frost, director-general of the British Chambers of Commerce, says: “It is quite clear that the economic position is likely to deteriorate in the coming months. So it would be crazy to do anything to make the UK a less competitive place.” The CBI, which also opposes the proposals, has estimated that up to 250,000 jobs could be jeopardized if employers were inhibited from using agency staff to fill temporary employment gaps and meet seasonal peaks in demand or one-off orders and contracts. John Hutton, business and enterprise secretary, told the TUC annual conference in September that ministers would not give in to demands on temporary workers’ rights if it damaged Britain’s flexible labor market.
Even though employers have plenty of support in their opposition of the directive, they still have legitimate fears. For instance, while the government seems to agree with employers and have resolved to stand firm against the proposal, employers are concerned that ultimately the government may be tempted to make concessions in return for an offer from the Portuguese presidency to secure permanent exemption for the UK from the EU working time directive limiting the length of the working week to 48 hours. Business leaders also fear that Mr. Hutton, who is expected to attend Wednesday's meeting of EU employment ministers, may be unable to gain sufficient support from other member states to block any “unwelcome” measures included in a temporary and agency workers directive. To add onto this, there are doubts about the continued support of both Poland and Germany for the British position. Until Wednesday after the conclusion of the meeting, business leaders will be on edge about this new workers' rights proposal.
I was interested in this article not only because the EU is a major topic of class discussion but also because of my involvement with workers' rights for my common course final project. After reading this article, I honestly don't see how this proposal would make the UK labor market less flexible, create obstacles to getting people back into work, or make the UK a less competitive place. If anything, it should make it more competitive and create less obstacles in getting people back into work because more people will want to join the labor force as temporary or agency workers to reap the benefits. Maybe this is just my ignorance in economics talking, but it seems to me like the main reason as to why business leaders are opposing this proposal is because they don't want to dish out any more money and/or benefits than they already have to.
Title: Employers attack EU workers’ rights plan
Date: 12/01/07
Source: Financial Times
Apparently, British employers are not alone in their disapproval of the proposed directive. David Frost, director-general of the British Chambers of Commerce, says: “It is quite clear that the economic position is likely to deteriorate in the coming months. So it would be crazy to do anything to make the UK a less competitive place.” The CBI, which also opposes the proposals, has estimated that up to 250,000 jobs could be jeopardized if employers were inhibited from using agency staff to fill temporary employment gaps and meet seasonal peaks in demand or one-off orders and contracts. John Hutton, business and enterprise secretary, told the TUC annual conference in September that ministers would not give in to demands on temporary workers’ rights if it damaged Britain’s flexible labor market.
Even though employers have plenty of support in their opposition of the directive, they still have legitimate fears. For instance, while the government seems to agree with employers and have resolved to stand firm against the proposal, employers are concerned that ultimately the government may be tempted to make concessions in return for an offer from the Portuguese presidency to secure permanent exemption for the UK from the EU working time directive limiting the length of the working week to 48 hours. Business leaders also fear that Mr. Hutton, who is expected to attend Wednesday's meeting of EU employment ministers, may be unable to gain sufficient support from other member states to block any “unwelcome” measures included in a temporary and agency workers directive. To add onto this, there are doubts about the continued support of both Poland and Germany for the British position. Until Wednesday after the conclusion of the meeting, business leaders will be on edge about this new workers' rights proposal.
I was interested in this article not only because the EU is a major topic of class discussion but also because of my involvement with workers' rights for my common course final project. After reading this article, I honestly don't see how this proposal would make the UK labor market less flexible, create obstacles to getting people back into work, or make the UK a less competitive place. If anything, it should make it more competitive and create less obstacles in getting people back into work because more people will want to join the labor force as temporary or agency workers to reap the benefits. Maybe this is just my ignorance in economics talking, but it seems to me like the main reason as to why business leaders are opposing this proposal is because they don't want to dish out any more money and/or benefits than they already have to.
12/01/07
Reading through today's business section of the Guardian online newspaper, I was particularly drawn to a specific article which was located in the upper left-hand corner. It of course deals with the current credit crunch turmoil as well as rising petrol prices, and is also a topic we have been discussing in class. Because of the concern caused by the two factors named above, consumer confidence has been pushed to its lowest level since the invasion of Iraq in March 2003.
Title: Consumer confidence at four-year low
Date: 12/01/07
Source: The Guardian
The leading market research organization, GfK/NOP, released a survey yesterday morning which showed that consumer confidence fell for the third consecutive month in November. The five core measures that make up the monthly index also all showed a decline, falling to -10 in November from -8 the previous month, even though analysts only predicted a drop to -9. In addition to these findings, the major purchases measure, which records whether people feel the time is right for a large acquisition, fell to its lowest level since 1995. As a result, GfK/NOP warned that the drop in confidence could be bad news for retailers this Christmas.
The fall in confidence stems from people's pessimism about both their personal finances and the general financial situation over the last 12 months, and also in the year ahead. "With petrol prices racing past £1 a litre, food prices on the increase and the prospect of higher mortgages and loan fees on the horizon resulting from the credit crunch, even the most optimistic seem to view their glass as half empty," said Rachael Joy. To add to this, on Thursday the Bank of England governor Mervyn King warned MPs that the short-term outlook for the economy was "rather uncomfortable" and "highly uncertain."
For any UK citizen, regardless of their background or profession, this is bad news. As a result of everything being at their lowest levels, the economy is only going to suffer more than it already has. The credit crunch and rising petrol prices have done an incredible amount of damage already and, unfortunately, I don't see conditions improving anytime soon. In a rather recent article, King said that the long-term outlook for the economy is one of a return of growth to its average rate and the lowering of inflation back to its target. With his dire short-term outlook of uncomfortableness and uncertainty, however, it's rather hard to have any hope for the future. With the holiday season right around the corner and GfK/NOP's warnings, hopefully it will still be a Merry Christmas.
Title: Consumer confidence at four-year low
Date: 12/01/07
Source: The Guardian
The leading market research organization, GfK/NOP, released a survey yesterday morning which showed that consumer confidence fell for the third consecutive month in November. The five core measures that make up the monthly index also all showed a decline, falling to -10 in November from -8 the previous month, even though analysts only predicted a drop to -9. In addition to these findings, the major purchases measure, which records whether people feel the time is right for a large acquisition, fell to its lowest level since 1995. As a result, GfK/NOP warned that the drop in confidence could be bad news for retailers this Christmas.
The fall in confidence stems from people's pessimism about both their personal finances and the general financial situation over the last 12 months, and also in the year ahead. "With petrol prices racing past £1 a litre, food prices on the increase and the prospect of higher mortgages and loan fees on the horizon resulting from the credit crunch, even the most optimistic seem to view their glass as half empty," said Rachael Joy. To add to this, on Thursday the Bank of England governor Mervyn King warned MPs that the short-term outlook for the economy was "rather uncomfortable" and "highly uncertain."
For any UK citizen, regardless of their background or profession, this is bad news. As a result of everything being at their lowest levels, the economy is only going to suffer more than it already has. The credit crunch and rising petrol prices have done an incredible amount of damage already and, unfortunately, I don't see conditions improving anytime soon. In a rather recent article, King said that the long-term outlook for the economy is one of a return of growth to its average rate and the lowering of inflation back to its target. With his dire short-term outlook of uncomfortableness and uncertainty, however, it's rather hard to have any hope for the future. With the holiday season right around the corner and GfK/NOP's warnings, hopefully it will still be a Merry Christmas.
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