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Showing posts with label sector. Show all posts
Showing posts with label sector. Show all posts
Wednesday, 22 November 2023
Sunday, 24 September 2023
Wednesday, 20 September 2023
Saturday, 17 June 2023
Economics Essay 42: Financial Sector Benefits
Evaluate the extent to which the UK’s financial sector is beneficial to the UK economy.
The UK's financial sector has historically played a significant role in the country's economy, contributing to its growth and prosperity. However, evaluating the extent to which the financial sector is beneficial requires considering both its positive contributions and potential drawbacks. Let's examine the benefits of the UK's financial sector:
Economic Contribution: The financial sector contributes significantly to the UK's GDP and employment. It generates substantial tax revenue, which supports public services and infrastructure development. The sector's activities, including banking, insurance, asset management, and financial technology, create jobs, attract talent, and stimulate economic activity.
Global Financial Hub: London, as a global financial hub, attracts international businesses, investors, and professionals. The presence of a robust financial sector facilitates capital flows, investment, and financial services both domestically and internationally. It bolsters the UK's status as a preferred destination for financial transactions and headquarters for multinational companies.
Access to Capital: The financial sector provides access to capital for businesses, enabling them to grow, invest in innovation, and create jobs. Through initial public offerings (IPOs), venture capital, and various financial instruments, companies can raise funds to expand their operations and drive economic development.
Financial Innovation: The UK's financial sector has been at the forefront of financial innovation, introducing new products, services, and technologies. Innovations such as contactless payments, peer-to-peer lending, and digital banking have transformed the way people conduct financial transactions, enhancing convenience, efficiency, and financial inclusion.
Expertise and Professional Services: The financial sector in the UK has a wealth of expertise and a strong professional services industry. Highly skilled professionals in areas such as finance, law, accounting, and consultancy support businesses and individuals in making informed financial decisions. This expertise enhances the overall competitiveness of the UK economy.
However, it is important to acknowledge the potential drawbacks or challenges associated with the financial sector:
Concentration of Wealth: The financial sector's success can contribute to wealth inequality and a concentration of economic power. High salaries and bonuses in the sector can exacerbate income disparities, potentially leading to social and economic imbalances.
Systemic Risks: The financial sector is exposed to risks, including financial crises and market volatility. These risks can have widespread consequences, impacting the broader economy and causing disruptions in employment, investment, and consumer spending.
Regulatory Challenges: The complexity of financial markets and the need for effective regulation pose ongoing challenges. Balancing the need for robust oversight with promoting innovation and competitiveness requires continuous regulatory adaptation and supervision.
Vulnerability to External Factors: The UK's financial sector can be sensitive to global economic conditions and geopolitical factors. Changes in international regulations, trade agreements, or financial market sentiment can influence the sector's performance and stability.
Overall, while the UK's financial sector has substantial benefits, its impact is not without challenges and potential risks. Continual monitoring, effective regulation, and efforts to address any negative consequences are crucial to ensuring that the sector continues to contribute positively to the UK economy while managing potential drawbacks.
Economics Essay 41: Regulation in Financial Sector
Explain why economies such as the UK need a legal framework of regulation for the financial sector.
Economies like the UK require a legal framework of regulation for the financial sector for several reasons. The financial sector plays a critical role in the economy, and effective regulation helps ensure stability, protect consumers, maintain market integrity, and mitigate systemic risks. Here are arguments supported by examples:
- Financial Stability and Systemic Risk Mitigation: Regulation is crucial in promoting financial stability and preventing crises that can have far-reaching consequences for the economy. By implementing prudential regulations, governments can safeguard the financial system against risks and shocks.
Example: The 2008 global financial crisis highlighted the importance of financial regulation. In the UK, the Financial Services Authority (FSA) was replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to enhance regulatory oversight and prevent a recurrence of such systemic risks.
- Consumer Protection: Regulation protects consumers by ensuring fair and transparent practices in financial markets, preventing fraud, and providing mechanisms for dispute resolution. Regulations can set standards for product disclosures, customer data protection, and fair treatment of consumers.
Example: The UK's Financial Services Compensation Scheme (FSCS) is a regulatory initiative that protects consumers' deposits in case of bank failures. This scheme assures individuals that their deposits are safeguarded up to a certain limit, fostering trust in the banking system.
- Market Integrity and Confidence: Regulations play a crucial role in maintaining market integrity, preventing market abuse, and promoting investor confidence. This fosters trust in the financial sector, attracting investment and supporting economic growth.
Example: The UK's Financial Conduct Authority (FCA) regulates conduct in financial markets, ensuring fair and transparent practices. The FCA enforces regulations related to insider trading, market manipulation, and mis-selling of financial products, which helps maintain market integrity and investor confidence.
- International Reputation and Regulatory Standards: A well-regulated financial sector enhances a country's international reputation and facilitates cross-border transactions. Regulatory frameworks aligned with international standards and best practices help attract foreign investment and promote financial integration.
Example: The UK's regulatory framework for the financial sector adheres to international standards, such as those set by the Basel Committee on Banking Supervision. This alignment helps maintain the UK's position as a global financial hub and encourages international investors to engage with UK-based financial institutions.
- Systematic Risk Management: Regulations provide tools and mechanisms to manage systemic risks, such as capital adequacy requirements, stress tests, and resolution frameworks. These measures aim to prevent the failure of large financial institutions and minimize the impact on the wider economy.
Example: The UK's Financial Policy Committee (FPC), established after the financial crisis, monitors systemic risks and promotes the resilience of the financial system. The FPC sets macroprudential regulations, including capital buffers, to ensure banks can withstand economic downturns and protect the stability of the financial sector.
In summary, a legal framework of regulation is essential for the financial sector in economies like the UK. It promotes financial stability, protects consumers, maintains market integrity, boosts investor confidence, and helps manage systemic risks. The examples provided highlight the importance of regulation in preventing financial crises, ensuring fair practices, and maintaining the UK's reputation as a global financial center.
Tuesday, 28 March 2023
Friday, 5 March 2021
Thursday, 15 November 2018
Friday, 27 October 2017
Publicly owned energy minnows take on big six in troubled UK market
Adam Vaughan in The Guardian
A wave of new publicly owned companies is taking on the big six energy suppliers, as local authorities search out new revenue and seek to restore faith in public services and tackle fuel poverty.
Islington council last week launched a not-for-profit energy firm, London’s first municipal operator in more than a century, while Doncaster’s energy company will start early next month.
Portsmouth is also on the verge of becoming the first Conservative-controlled council to launch one, to bring down residents’ bills as well as bringing investment to the city.
The first and best-known publicly owned energy companies, Robin Hood Energy in Nottingham and Bristol Energy, started two years ago. But the growing trend came to the fore this month when Nicola Sturgeon promised to create a Scottish public energy company by 2021.
“No shareholders to worry about. No corporate bonuses to consider. It would give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers,” Scotland’s first minister said, in an echo of the marketing used by the councils who have already started their own energy companies.
Sturgeon’s firm will be entering an increasingly crowded space: publicly owned firms include Liverpool’s Leccy, Derby’s Ram, and Leeds’ White Rose. Councils in Sussex are clubbing together to launch Your Energy Sussex latter this year.
The driving forces for these councils stepping into the complex, heavily regulated energy space are largely twofold. One is the need to create a new revenue stream in a time of austerity, as well as rebuilding the public sphere – councils are perhaps most visible to residents when they close libraries and cut other services.
But there is also a political project afoot as well, as Labour-controlled councils such as Nottingham push an agenda that has since been picked up by Jeremy Corbyn during the last election.
There is also genuine concern over fuel poverty, and a hope that local authorities will be more trusted than the usual energy suppliers, that even Theresa May says have ripped customers off.
“It’s about councils trying to provide a trusted and better service for people to switch. We want a challenger model to the big six,” said Labour MP Caroline Flint, whose Doncaster constituency will see the launch of publicly owned Great Northern Energy on 7 November.
The flurry of such firms showed Labour’s manifesto pledge of a publicly owned energy supplier in each region was happening regardless of the party’s failure to win power in June’s snap general election, Flint said.
Tackling the growing amount of households in fuel poverty, which number 2.5 million in England and Wales, is another big motivation.
Steve Battlemuch, chair of the board of Robin Hood Energy and a Labour councillor, said: “Nottingham has a lot of fuel poverty, lot of people on prepayment meters [which people in energy debt are often moved on to]. That was what drove us: coming into the market and driving down prices for the customer.”
Like other public firms, part of his sales pitch is that there are no corporate masters to pay.
“There’s no shareholder bonuses, because there’s no shareholder apart from Nottingham city council. There’s no director bonuses. I had a cupcake on our first anniversary,” he said.
Peter Haigh, managing director of Bristol Energy, said his organisation was more inclusive than private companies, and its physical presence in the city was a big attraction.
“Customers can and do walk in, sign up and pay a bill. That often attracts customers who have never switched, people who can pop in face to face,” he said.
Part of the reason councils are getting into energy is the barriers to market are not as great as they once were.
Mark Coyle, strategy director of Utiligroup, which has provided services to most of the publicly owned energy companies, said: “We’ve been able to lower the barriers for them, without lowering compliance.”
But while the sector appears to be burgeoning, combined these companies are a minnow compared with the blue whales that are the big six firms, which between them account for 80% share of the market.
Bristol Energy is biggest publicly owned energy supplier, with about 110,000 customers; Robin Hood has just over 100,000. Both have created more than 100 jobs locally, but neither has yet recovered their start-up costs.
Moreover, while such firms appear to be proliferating, most are simply rebranding off Robin Hood rather than setting up as fully licensed suppliers which can buy energy on the wholesale market. The approach has its critics.
“Islington are doing a good thing but it’s a shame that they’ve had to go to Nottingham to buy the energy,” said Caroline Russell, a Green party London assembly member.
Sadiq Khan, London’s mayor, has promised to create an energy company for Londoners, but has been slow to deliver.
Last month he was advised by experts to piggyback off an existing supplier, rather than create his own licensed company. While cheaper and quicker to do, it would also mean he had less power and flexibility to offer something genuinely new and different compared with the 50-plus private firms already in the market.
Nigel Cornwall, founder of energy analysts Cornwall Insight, said that while he was supportive of publicly owned energy companies, it was revealing that many councils were opting to ride on Robin Hood’s coat-tails rather than set up their own licensed firm.
“This is high-risk stuff. The sector is complicated. You [the council] probably don’t have the resources. You’ve probably underestimated the costs. And that’s with costs of entry falling dramatically,” he said.
Cornwall said he was also sceptical as to whether the companies would be sustainable and would become a permanent fixture in the market – but that would not stop them trying.
Battlemuch said: “What we need to do is break through into the mass market. That’s what we’re trying to do.”
A wave of new publicly owned companies is taking on the big six energy suppliers, as local authorities search out new revenue and seek to restore faith in public services and tackle fuel poverty.
Islington council last week launched a not-for-profit energy firm, London’s first municipal operator in more than a century, while Doncaster’s energy company will start early next month.
Portsmouth is also on the verge of becoming the first Conservative-controlled council to launch one, to bring down residents’ bills as well as bringing investment to the city.
The first and best-known publicly owned energy companies, Robin Hood Energy in Nottingham and Bristol Energy, started two years ago. But the growing trend came to the fore this month when Nicola Sturgeon promised to create a Scottish public energy company by 2021.
“No shareholders to worry about. No corporate bonuses to consider. It would give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers,” Scotland’s first minister said, in an echo of the marketing used by the councils who have already started their own energy companies.
Sturgeon’s firm will be entering an increasingly crowded space: publicly owned firms include Liverpool’s Leccy, Derby’s Ram, and Leeds’ White Rose. Councils in Sussex are clubbing together to launch Your Energy Sussex latter this year.
The driving forces for these councils stepping into the complex, heavily regulated energy space are largely twofold. One is the need to create a new revenue stream in a time of austerity, as well as rebuilding the public sphere – councils are perhaps most visible to residents when they close libraries and cut other services.
But there is also a political project afoot as well, as Labour-controlled councils such as Nottingham push an agenda that has since been picked up by Jeremy Corbyn during the last election.
There is also genuine concern over fuel poverty, and a hope that local authorities will be more trusted than the usual energy suppliers, that even Theresa May says have ripped customers off.
“It’s about councils trying to provide a trusted and better service for people to switch. We want a challenger model to the big six,” said Labour MP Caroline Flint, whose Doncaster constituency will see the launch of publicly owned Great Northern Energy on 7 November.
The flurry of such firms showed Labour’s manifesto pledge of a publicly owned energy supplier in each region was happening regardless of the party’s failure to win power in June’s snap general election, Flint said.
Tackling the growing amount of households in fuel poverty, which number 2.5 million in England and Wales, is another big motivation.
Steve Battlemuch, chair of the board of Robin Hood Energy and a Labour councillor, said: “Nottingham has a lot of fuel poverty, lot of people on prepayment meters [which people in energy debt are often moved on to]. That was what drove us: coming into the market and driving down prices for the customer.”
Like other public firms, part of his sales pitch is that there are no corporate masters to pay.
“There’s no shareholder bonuses, because there’s no shareholder apart from Nottingham city council. There’s no director bonuses. I had a cupcake on our first anniversary,” he said.
Peter Haigh, managing director of Bristol Energy, said his organisation was more inclusive than private companies, and its physical presence in the city was a big attraction.
“Customers can and do walk in, sign up and pay a bill. That often attracts customers who have never switched, people who can pop in face to face,” he said.
Part of the reason councils are getting into energy is the barriers to market are not as great as they once were.
Mark Coyle, strategy director of Utiligroup, which has provided services to most of the publicly owned energy companies, said: “We’ve been able to lower the barriers for them, without lowering compliance.”
But while the sector appears to be burgeoning, combined these companies are a minnow compared with the blue whales that are the big six firms, which between them account for 80% share of the market.
Bristol Energy is biggest publicly owned energy supplier, with about 110,000 customers; Robin Hood has just over 100,000. Both have created more than 100 jobs locally, but neither has yet recovered their start-up costs.
Moreover, while such firms appear to be proliferating, most are simply rebranding off Robin Hood rather than setting up as fully licensed suppliers which can buy energy on the wholesale market. The approach has its critics.
“Islington are doing a good thing but it’s a shame that they’ve had to go to Nottingham to buy the energy,” said Caroline Russell, a Green party London assembly member.
Sadiq Khan, London’s mayor, has promised to create an energy company for Londoners, but has been slow to deliver.
Last month he was advised by experts to piggyback off an existing supplier, rather than create his own licensed company. While cheaper and quicker to do, it would also mean he had less power and flexibility to offer something genuinely new and different compared with the 50-plus private firms already in the market.
Nigel Cornwall, founder of energy analysts Cornwall Insight, said that while he was supportive of publicly owned energy companies, it was revealing that many councils were opting to ride on Robin Hood’s coat-tails rather than set up their own licensed firm.
“This is high-risk stuff. The sector is complicated. You [the council] probably don’t have the resources. You’ve probably underestimated the costs. And that’s with costs of entry falling dramatically,” he said.
Cornwall said he was also sceptical as to whether the companies would be sustainable and would become a permanent fixture in the market – but that would not stop them trying.
Battlemuch said: “What we need to do is break through into the mass market. That’s what we’re trying to do.”
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