Why can PwC charge such superhuman fees? It’s all in the power of bargaining
The liquidation of Carillion continues to feature prominently in the news. Last week, the story was the fees being charged by PwC, the accountancy firm tasked with salvaging money from the wreckage. It emerged that PwC’s fees, which take priority in terms of being paid over the various creditors and pensioners, amounted to £20.4m for […]
The balance between wages and capital is shifting – rent seekers had better beware
The first column of a new year is the time for a prediction. By far the hardest part of forecasting is to identify tipping points. The success rate of calling a break in an established trend is very low. Accompanied by suitable health warnings, 2018 looks like the year in which the longstanding relationship between […]
Comparison sites are forcing businesses and economists to rethink price theories
The competition and Markets Authority (CMA) published a report about Price comparison sites at the end of last month. They seem simple enough, but these straightforward sites raise interesting issues for economics. Overall, the CMA was pretty positive about the DCTs – digital comparison tools, to give them their Sunday best name. The conclusion was […]
Beware the dysfunctional consequences of imposing misguided incentive systems
Following the disclosure of salaries at the BBC, it has hardly seemed possible to open a newspaper or switch on the television without being bombarded by stories about pay. By pure coincidence, an academic paper entitled “Pay for Performance and Beyond” has just appeared. So what, you might ask? Except that it is one of […]
Cautious corporates sitting on hoards of cash are to blame for our slow recovery
The slow recovery since the financial crisis remains a dominant issue in both political and economic debate. The economy has definitely revived since 2009, the depth of the recession, in both Britain and America. The average annual growth in real GDP has been very similar, at 2.0 and 2.1 per cent respectively. This is much […]
Corbyn and McDonnell’s delusional tax plan would cut revenue and harm growth
The income tax system in the UK is highly progressive. Not many people know that, to use a catch phrase attributed, rightly or wrongly, to the great actor Michael Caine. The top one per cent of earners contribute 27 per cent of all income tax receipts. To put it in context, just 300,000 people pay […]
How to stop tech hubs in urban hotspots from intensifying geographic inequalities
Perhaps George Osborne’s most abiding legacy from his time as chancellor will be the creation of the concept of the Northern Powerhouse. Certainly Manchester, its principal focus, is booming. The landscape of the centre is being altered dramatically by skyscrapers. Peel Holdings, the huge investment and property outfit, is planning to double the size of […]
Does the productivity gap actually exist?
Whoever wins the election tomorrow will have to grapple with what appears to be a fundamental economic problem. Estimated productivity growth in the UK is virtually at a standstill. The standard definition of productivity is the average output per employee across the economy as a whole, after adjusting output for inflation – or “real” output, […]
Why companies fail: Don’t look to economic textbooks to master dynamic capitalism
Is setting up a micro brewery a licence to print money? This month, a private equity company acquired 22 per cent of BrewDog for just over £200 million, netting a neat £100 million for the founders. Last year, the owners of Budweiser, AB InBev, bought Camden Town Brewery for a reported £85 million. This follows […]
