Inadequate income

Nearly a third of the population of Britain is living on an "inadequate" income, according to research by the Joseph Rowntree Foundation (JRF).

In 2014-15, it said that 19 million people were living on less than the Minimum Income Standard (MIS).

It said the problem was that household costs have been rising, while incomes have stagnated.

The government has already promised to tackle the issue, after Theresa May identified those "just about managing".

It said it was taking "targeted action" to raise incomes.

The MIS is set by experts at Loughborough University, and is based on what members of the public think is a reasonable income to live on.

Although the precise level depends on individual circumstances, a single person renting a flat outside London is said to need to earn at least £17,300 a year to reach the MIS.

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Questions

1. What is MIS?

2. What steps can the government take to raise income?

3. Why have incomes not risen with costs?

Wage growth

Wages grew faster than the rate of inflation at the end of 2016, official figures show.

In the three months to December, wages grew 2.6% on an annualised basis in the UK, according to the Office for National Statistics (ONS).

However, that was slower than the previous period, leading analysts to suggest households could face a "squeeze" on spending later this year.

The ONS also said the jobless rate held steady at an 11-year low of 4.8%.

The number of non-UK nationals working in the UK increased by 233,000 to 3.48 million compared with a year ago.

Household squeeze

"The unemployment rate is now at its lowest in over a decade, but wage growth remains subdued by historical standards," the ONS said in its commentary.

Wage growth slowed from the 2.8% rate seen in the three months to November.

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Questions

1. If unemployment is so low, why haven't wages grown?

2. What factors determine wages?

3. How can a company increase wages but lower wage costs?

4. If unemployment falls, wouldn't supply of goods increase - in which case why is inflation rising?

Minimum wage

The government has named 360 businesses which have failed to pay either the National Minimum Wage (NMW) or the National Living Wage (NLW).

Among them are well-known names like Debenhams, Subway, Lloyds Pharmacy and St Mirren Football Club.

More than 15,500 workers had to be paid back nearly one million pounds.

But that may represent just the tip of the iceberg: The Office for National Statistics has calculated that 362,000 jobs did not pay the NMW in April 2016.

The biggest offenders were employers in hairdressing, hospitality and retail.

One worker at a dental practice in London's Harley Street was refunded nearly £12,000.

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Questions

1. Are there any advantages to having a NMW?

2. How might the NMW lead to a) unemployment b) a rise in employment c) both?

Bank keeps note

The new £5 note will not be withdrawn, despite concerns that it contains traces of animal fat, the Bank of England says.

The Bank said it had concluded it would be "appropriate" to keep the £5 polymer note in circulation.

It will also issue the £10 polymer note as planned in September, it added.

Vegans and some religious groups had voiced concerns, as the note contains a small amount of tallow, which is derived from meat products.

'Utmost seriousness'

A petition to ban the note attracted more than 100,000 signatures.

The Bank said it treated "the concerns raised by members of the public with the utmost seriousness".

However, the central bank also emphasised that "an extremely small amount of tallow" was used at an early stage of producing the polymer pellets, which were then used to create the notes.

Watch the video and read more

Five facts

Questions

1. What are the costs if the notes were reprinted?

2. Could the reprinting lead to any cost savings?

Inflation questions

Inflation has reached its highest rate for two-and-a-half years, mainly as a result of the rising price of fuel.

Annual inflation as measured by the Consumer Prices Index (CPI) reached 1.8% last month, the Office for National Statistics (ONS) said, up from a rate of 1.6% in December.

It is the fourth consecutive month that the rate has risen and takes inflation to its highest since June 2014.

Fuel prices hit a two-year high in early February, according to the RAC.

As well as fuel, the ONS said food prices also contributed to the rise in inflation, as prices were unchanged between December and January, having fallen a year ago.

Offsetting these factors, the prices of clothing and footwear fell by more than they did 12 months ago

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Questions

1. If inflation is 5% does this mean all prices are rising?

2. Why might import prices rise?

3. Who are the winners and losers when there is inflation?

4. How does inflation affect the exchange rate?

5. If prices rise, won't that lead to people buying less and then the price will fall?

6. Why might the price of clothing and footwear have fallen?

Location, location, location

UK tech firm Dyson has opened a new $400m research centre in Singapore.

It says the move was in part because of the lack of qualified scientists and engineers in Britain.

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Questions

1. What are the attractions of the UK to FDI?

2. What factors does a business take into account when locating?

3. In the short term how can the government intervene to help Dyson?

Merger...

French carmaker PSA says it is considering taking over General Motors' (GM) European Opel business.

PSA - which makes Peugeot, Citroen and DS cars - and GM already share production of SUVs and minivans.

The French government holds a 14% stake in PSA, as do the Peugeot family and Chinese firm Dongfeng Motor.

Any deal would include Opel's UK affiliate Vauxhall, and create a carmaker with about 16% of the European market.

Vauxhall employs about 35,000 people in the UK, including 4,500 working at its manufacturing plants in Ellesmere Port and Luton, and at its warehouse and head office in Luton.

Its customer centre in Luton employs 300 people, and 120 people work at its On Star headquarters. Another 23,000 work in its retail network and 7,000 in its UK supply chain.

'Potential acquisition'

Shares in the maker of Peugeot cars were 4.2% higher in Paris in afternoon trading.

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Questions

1. What types of merger are there?

2. Why do companies merge?

3. Why might the CMA step in?

4. In the artcile above what are the main reasons for the merger?

Questions...

US Federal Reserve chair, Janet Yellen, has said it may be "appropriate" for the central bank to raise interest rates at one of its upcoming meetings.

The bank's next meeting on monetary policy is on March 14 and 15.

Speaking to Congress she said delaying rate hikes would be "unwise", and could leave the Fed having to move too fast later, risking causing a recession.

In December the Fed raised its benchmark interest rate by 0.25%, only the second increase in a decade

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Questions

1. Why might a central bank raise interest rates?

2. Who gains/loses when interest rates rise?

3. How does a rise in interest rates affect the exchange rate?

One way of using a blog post

The troubled Co-op Bank has announced that it is putting itself up for sale while warning it is set to make another annual loss.

In a statement this morning, the bank said it would invite offers to buy all of its shares, saying its ethical approach and 4m customers made it a “strong franchise with significant potential”.

The loss-making bank almost collapsed in 2013 after discovering a black hole of more than £1bn.

It was rescued by US hedge funds and said it had made “considerable progress” on its turnaround since then, with its cost base reduced by more than 20pc since 2014.

However it said today that it would fall to a "significant" loss for the year ending December 2016, although the amount would be lower than the £610m it lost in 2015.

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Questions that could be considered:

1. If it is a strong franchise why is it making a loss?

2. What is/are the main source(s) of profits for banks?

3. If it has 'significant potential' why sell?

4. Does the Co-op's ethical stance mean it has no close competitors?

5. What are the risks in having an 'ethical stance' and what IS the bank's 'ethical stance'?

One way of using a blog post

From April onwards, 500,000 shopkeepers, cafe owners, pub landlords and other small business owners will be charged up to ten times more, taking a £600-a-year tax bill up to £3,000 and forcing many to close.

And it has also emerged that guesthouses in popular tourist spots such as East Sussex and Devon also face soaring bills, because of a tax raid on family-run businesses.

Owners say they will have no option but to pass on the cost to guests. Many small hotels, bed and breakfasts and self-catering cottages fear they will have to shut down if holidaying families respond to price rises by going abroad instead.

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Things to consider:

1. Does this offer an opportunity to firms who absorb the extra cost, to undercut their rivals?
2. If owners pass on the costs, what will determine how much of the costs are passed on?
3. Are holidaying families likely to go abroad, given that Brexit looms and with that a possible/probable fall in the exchange rate?
4. When did rates/taxes last go up - and is this for every business or do they have to be a certain size?

The article goes on to provide answers to some of these questions:

"For cafes, restaurants and shops, it’s based on the property size and location, and how much it would fetch if the whole building were let out.

In April, the Government is updating its estimated values for the first time in seven years."

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Therefore the article provides a starting point for discussion.