Competition Report on supermarkets

Measures designed to curb the power of major supermarkets and improve choice for consumers have been announced by the Competition Commission. Recommended changes to the planning system will make it harder for one chain to dominate a local area. And a new independent ombudsman will resolve any disputes between suppliers and retailers. But supermarkets are arguing that consumers could end up paying the cost of running the ombudsman scheme. BBC News

(Measures in detail.)

"Although, in many areas, there is good choice and strong competition between retailers, there are also a significant number of local areas where larger grocery stores face limited competition and local shoppers lose out," the Competition Commission said.

Critics of Britain's major supermarkets reacted angrily today after the Competition Commission announced new rules to curb the power of the major supermarket chains. Small retailers and environmental and consumer groups are concerned that the rules are not tough enough and will do little to curb the dominance of the large food retailers.

Supermarkets critics angry at report.

UK house prices in 1% annual fall

House prices in the UK have recorded their first annual fall for 12 years, according to the Nationwide. Prices fell by 1.1% in April, the sixth monthly decline in a row, and were down 1% from the levels seen in April 2007, the building society said. Nationwide said the price falls reflected a weakening market which had been hit by "poor affordability and tighter financial market conditions". BBC News Play the video clip of the Chief Economist of the Nationwide.

An interesting article in the Guardian (A house of cards) where Rob Williams argues that we mustn't bail out the housing market but give it time to 'self-correct'. 'What we are witnessing is a long, long overdue return to sensible borrowing and responsible lending at levels consistent with historic trends. For younger readers, or financial illiterates, that means mortgages at about 3.5 times salary, together with the necessity of saving for a deposit.'

Who will be hardest hit by a fall in house prices? Will anyone welcome falling house prices? Will views change if house prices continue to fall?

OFT in new supermarket crackdown

Britain's four biggest supermarkets are under investigation by the Office of Fair Trading (OFT) for fixing prices of health, beauty and grocery products. The OFT also contacted some of their suppliers such as Unilever, Procter & Gamble, Reckitt Benckiser and Mars. News of the latest investigation came days after the OFT announced it was looking into allegations that tobacco firms and 11 retailers, including Asda, Sainsbury's and Tesco, had fixed the price of tobacco products. The banking and housebuilding sectors have also been the targets of the OFT recently. Companies found guilty of price collusion can expect fines under the Competition Act of up to 10% of turnover. Under the 2002 Enterprise Act, cartel-like behaviour may also carry a jail term of up to five years for directors or senior executives involved. The number of recent investigations has fuelled criticism from some business leaders over the watchdog's tactics, which have been described as overly aggressive since the OFT's current chief executive John Fingleton took charge at the end of 2005.

BBC News

Rich List reveals wealthy reap profits under Labour

The richest 1,000 people in Britain have seen their wealth quadruple under Labour, according to The Sunday Times Rich List published today. Even under Gordon Brown’s brief premiership their fortunes have soared by 15%, just as the financial squeeze and faltering house prices have hit ordinary people.The collective wealth of the 1,000 richest has jumped to £412 billion, up from £99 billion in 1997. Total net wealth during the same period has slightly more than doubled.

See also: Global billions ride the storm reveals the 2008 Rich List

US to send out $100bn in rebates

The US government plans to send out cheques to consumers totalling more than $100bn (£50bn), as part of a wider economic stimulus plan, imminently. US President George W Bush said the tax rebates, aimed at some 117 million US homes, would start going out on Monday. They had been due to go out in May. Individuals will see up to $600 and married couples could see up to $1,200. The rebates are part of a $150bn plan that aims to boost growth and encourage spending, and avert a recession. BBC News

See also:

US economy awaits stimulation from Bush's tax rebate

Stabilising demand - will the tax rebate work?

Use AD/AS analysis to show the impact the US government hopes these tax rebates will have.

Immigration: How should we react?

An interesting article by Samuel Brittan in the FT. He focuses on the current debate about immigration, making an important distinction between asylum seekers and economic migrants. Some really good analysis of the good and bad aspects of immigration in the light of the likely net immigration of 20 million people into the UK over the next half century. He ends with the view that 'If a more restrictive policy towards economic migrants were the price of a more humane treatment of asylum seekers, it would be worth paying.'

Punch hits out at 'tax on binge drinking'

An interesting article in today's Guardian questioning the effeciveness of alcohol taxes in reducing binge drinking. The chief executive of Britain's biggest pub company has attacked the recent above-inflation rise in alcohol duty, dismissing government claims that it could discourage binge drinking as "ridiculous". Giles Thorley, chief executive of Punch Taverns, warned today that the 6% rise in alcohol duty, announced in the March Budget, could even encourage excessive drinking because customers may choose to buy more cheaper alcohol from supermarkets and drink heavily at home."The pub is the home of responsible drinking. The number of restrictions that already exist as result of recent government legislation means that you are much safer drinking in the pub than anywhere else," he said.

http://www.guardian.co.uk/business/2008/apr/24/punchtaverns.fooddrinks

Think about the conditions that ensure that a tax that aims to reduce consumption is successful. Why doesn't Thorley think it will be successful?