Owen Tudor

One day in May, Wall Street experienced a “flash crash”, as Newsnight reported this evening. Share prices fell further, faster, than ever before: the Dow Jones fell 700 in ten minutes. Share prices recovered quickly, but they might not have done, and if they hadn’t, the global recession would have been dwarfed. What caused the crash was the use of share trading algorithms, computer programmes that buy and sell millions of shares automatically as prices change marginally. The same applies to currency trading. Normally, this just means that millions are bought, millions are sold, and a few pence are made. But as the Wall Street micro-crash showed, the movement in share prices can be massive – and so can the casualties. The Securities and Exchange Commission is investigating the causes of the micro-crash and could be considering regulation as a way of trying to control algorithmic trading. But there is another way. One of the effects of a Robin Hood Tax would be to tax the trades that the algorithms make. Because the margins are so small and the trades so short-term, even a small tax rate would make such trading uneconomic.

The Robin Hood Tax would lead to longer term investing and less market volatility.

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Anjum Klair

Reports of cuts to capital funding are emerging from all over the country as local authorities were told by the Department for Education in July to put on hold any funding not already ‘fully committed’.

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Richard Exell

Bad news about household consumption in the monthly consumer confidence poll and house price data released today.

The GfK/NOP Consumer Confidence Index fell slightly, to minus 20, from minus 18 in August (and minus 16 in September 2009).

• The index for how people felt their personal financial situation had changed over the previous 12 months fell to minus 5, from minus 3 last month (and plus 5 in September 2009).
• The index for how they judged the general economic situation over the next 12 months fell to minus 19 from minus 14 last month (and plus 4 in September 2009).

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Owen Tudor

Vince Cable has reinforced his reputation for economic liberalism and for continuity with the Blair-Brown government with a speech to the European Parliament today. And in at least three areas where he outlined his determination to maintain the policies of the previous Government, he has also underlined that he blieves in evidence-free rather than evidence-based policy making: labour standards in trade agreements; restrictions on working hours; and flexible labour markets.

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Richard Exell

The cuts will be hardest for people aged over 75, according to independent research released today by Age U.K. The charity reveals that, by 2014/5, the poorest people in this age group face service cuts worth £2,030 – equal to one-third of their incomes.

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Tim Page

Writing in today’s FT, Nick Butler and Jeffrey Sterling, take a wider view of the spat between Liam Fox and the Treasury about defence cuts. In doing so, they highlight the possibility, indeed in my view the responsibility, of supporting British industry through a variety of government actions, some interlinked and some not.

Butler and Sterling are quite right to remind us that the 2005 defence industrial review identified areas where Britain needed to protect and develop engineering and technical strengths to meet its needs. Some activities, from the integration and protection of complex information and cryptography to some advanced weapons systems, provide spin-offs from “a sector that represents Britain’s largest remaining investment in advanced manufacturing and high level engineering skills”. UK companies, from Rolls Royce to Detica, “hold world leading positions, and this does have a big effect on our industrial base and future growth potential”. If the defence budget is cut to less than 2% of GDP, as seems likely, according to Butler and Sterling, many in the sector will wither away: “The result will be that Britain loses one of its few remaining areas competitive advantage”.

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Richard Exell

For the past two years we have been pointing out that most workers have not had their pay frozen. Where the alternatives really have been pay freezes or redundancies, workers and their unions have agreed to go without a pay increase, but this has always been a minority experience – thank goodness. The latest figures from Incomes Data Services confirm this – just one pay deal in six is a freeze.   

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Richard Exell

Local Government Chronicle reports (paywall) that the abolition of the Regional Development Agencies could lead to the loss of money from the European Regional Development Fund that had already been allotted to the United Kingdom.

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Richard Exell

PCS has launched a campaign to Save Our Cultural Assets, aiming to make the economic and social case for galleries, museums and historic sites. The first element of the campaign is a petition, which has been launched to coincide with the European Trade Union Confederation’s day of action.

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Richard Exell

During the summer, a swathe of Councils switched off their safety cameras, but now it looks as though some parts of the UK will hold out against this trend.

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