Welcome to the Epsom College Economics and Enterprise Society blog. This site contains the musings of the army of students and staff interested in all matters relating to our subjects.

Disclaimer: the views expressed on this site are those of the contributors and not of Epsom College.

Tuesday 25 November 2014

What is Quantitative easing and does it work?


As the Feds (US central bank) announce the end to their third Quantitative easing program (QE3) questions aroused regarding whether the QE program actually worked in stimulating economic growth and how it worked. Experts and even Fed officials are divided in answering this with some claiming it was a major factor contributing to the USA’ s recent economic recovery and others claiming that it was a nonevent and had little influence on the economy and it may even be detrimental in the long term to the economy. With the Bank of Japan quickly following the Feds’ suit and the European Central Bank considering implementing QE, is it worth doing or should central banks focus on more conventional monetary policies such as ultra low interest rates.

 Quantitative easing is when the central bank purchases government assets (usually government bonds) with the aim of lowering interest rates and increasing the money supply in the economy. It starts with the central bank buying government bonds from financial institutions with electronically created money. This increases the banks’ reserves thus banks become more inclined to lend money to the public and firms which increases consumer expenditure and investment leading to economic growth. Moreover studies suggest that QE has a secondary effect in increasing bond prices. As the Fed bulk buys long term government bonds, the supply of these long term bonds decreases thus driving its price up. As the price of government these bonds increases, the longer term borrowing rates of these bonds decrease which further stimulates investment and growth.

Although there is a lot of evidence supporting the success of the QE program such as solid growth posted by America in the last two quarters (4.0%, 3.5% real GDP growth) and recent positive employment figures, many analysts believed when QE started that it would actually be dangerous in the long run. They believed that implementing quantitative easing would cause exponential inflation as consumers would have more money to spend and firms would have more money to invest thus resulting in an increase in aggregate demand causing demand pull inflation. However these critics failed in analysing the intricate mechanisms of QE. When the Feds bought government bonds from banks etc it swapped them with the bank’s reserves. This therefore results in no change in the net worth of the private sector thus it doesn’t cause inflation.

Moreover it has a positive psychological effect on consumers. Further implementation of QE is often followed by a rise in the stock market causing a positive wealth effect which would also greatly aid the economic recovery.


In conclusion, although QE doesn’t change the net worth of the private sector (as above) what it does serve to do effectively is liquidate banks thus it helps increase lending and stimulates economic growth. Furthermore the effect on bond prices and stock markets makes QE worth a try for central banks who have run out of ideas regarding monetary policy.

Wednesday 24 September 2014

How has the continued weakness in the Euro zone affected the UK Economy?

By the U4 Economic and Enterprise Society

Imports and Exports

The fact that most European counties aren’t buying the UKs goods, shows that European economic trouble is affecting the UK as we are not getting as much money in from goods as we should be. This can lead to unemployment in some sectors and losses of great sums of money.
The Euro zone is the UK's biggest trading partner. Official statistics show that nearly 47% of UK exports went to the Euro zone in 2011, while nearly 43% of UK imports came from the Euro zone. A long-term spiral of decline in the economies of Europe would mean less demand for UK good and services, and that could mean unemployment, especially in manufacturing. Governments have been pushing to grow industries faster, but Euro zone uncertainty leads to a lack of confidence among businesses.

This means we have to look out of Europe to sell our goods, which costs a lot more because of the longer journey and is bad for the environment. Over the past 4 years UK exports to countries outside of Europe have grown at a faster rate than countries in the Euro Zone. For example lots of goods are shipped to Australia, China, India and Russia instead of European countries.

Movement of Labour

Unemployment in the Euro area is falling but remains high compared to the UK, particularly in countries like Greece and Spain. The UK allows people from the Euro area to come to the UK and find jobs without any restrictions such as work permits. Higher unemployment in Europe has meant that many people have come to the UK looking for work. This may mean that it is harder for British people to find work.










British people travelling abroad:

In the second quarter of 2013, GDP in the Eurozone grew by 0.3%. This slow growth is affecting the British public who wish to travel abroad. British citizens who travel abroad get more euros to the pound due to the faster growth in GDP in Britain.

Tourism in Greece: An important aspect of Greece’s economy is tourism, supposedly tourism accounts for 17% of the country's GDP and gives employment to a similar percentage of people.
However, political unrest means that tourism is decreasing and that Greece will find it difficult to maintain these numbers. Greece is attracting new groups of tourists, although European countries have fallen, those from the Balkans and Russia have risen.

What can the government do about it?

The government is trying to create relationships with countries outside of the EU. For example, David Cameron has recently visited China to promote trade with them. We have seen Britain’s trade with China increase 22% over the past three years. In addition to this the government should decrease tariffs to make trading with Britain more attractive.
The UK can work closely with politicians in the European governments to help reduce the level of European debt and restore confidence for investors in struggling Eurozone economies.
Also on top of this the government can focus on improving the attractiveness and quality of UK goods. By investigating in education and training and technology.


Max Bacon, Chris Carpenter, Tom Evans, Charlie Milne, Will Noble, Scott Norman, Sam Robins, Asher Smith-Robson, Williams

Tuesday 24 June 2014

Immigration: A Brief Insight


The subject of immigration generated much controversy when it was debated in Advanced Economics earlier this week; I therefore thought I would compose a blog post to highlight some of the concerns that were elevated during the discussion.
            Evidently, UK headlines are littered with varying viewpoints on immigration, some state that native brits are ‘hardening’ to immigration whereas others argue that politicians are ignoring the strong emotions the public seemingly have over the touchy subject, at their peril.  However, with 57% of our population viewing immigration as one of the three foremost concerns facing the country and 17% viewing it as a personal threat, it is certainly not a subject that can be overlooked.
            In my opinion, immigration imposes a threat on local public services, such as the overloaded NHS and nearby schools.  Yet, immigration does hold many benefits on a macro level.  Indeed, a higher proportion of migrants in the UK have had a tertiary education and more than 75% are employed; with the average age being 31 and many returning to their native countries before their fiscally draining retirement years, it may be interpreted that the income tax and VAT generated from the average 9 year stay is crucial for the UK’s budget position.   In fact, immigrants play a role in easing the debt burden that currently hangs over the UK.  If this financial strain was spread over native brits alone it is estimated that this debt would account for about £28, 650 per person.  However, when immigrants are included the amount per person decreases to £21, 800.  Immigrants certainly are not a quick fix for the UK’s debt burden but they do play a role in lessening the financial strain.
            Of course, this does not account for the half a million illegal immigrants, who currently leach of the system or refugees/asylum seekers. However, it is not the NHS’ job to police patients and some may see it as morally wrong to deny refugees or asylum seekers of treatment if needed.  Quite clearly there are issues revolving around welfare provision, merely by residency individuals qualify for these public services and this is what makes the UK an attractive country to migrate to.  Perhaps, if other countries implemented similar welfare systems, the UK’s immigrations levels would slump.
            There are benefits and consequences of immigration and here I have only covered the minutia of this considerable debate.  From an economic perspective, an increasing labour supply is vastly positive.  However, with UKIP growing in popularity, it is clear that the UK government will have to tackle the concern of migration. 

Monday 24 March 2014

Mr. Shaun Taylor : "From 150k to 150million in 15 years"

On Friday 21st March, the Epsom College Economics and Enterprise society hosted a lecture from Mr. Shaun Taylor.  The lecture was thoroughly enjoyed by the society and wider members of the college.  He discussed the development of his business HiFX and telescoped attention onto the key characteristics that are necessary for success in the competitive business industry.
HiFx is a UK-based foreign exchange money broker, that provides foreign exchange and international money transfer services.  This service is used by the general public and large corporations.  For example, if an individual were to purchase a holiday home in Spain, they may use HiFX in order to convert their pounds into euros  make their payment.

Mr. Taylor shed light on the reason behind his business success, stating that it was due to his ability to provide better rates than the commercial banks.  However, despite his business not being a social enterprise, his approach to business was overtly ethical and his future business plans for his pension scheme continue to uphold this ethos. His passion and drive was very inspiring.

The lecture was also very informative and would have been particularly relatable to those currently studying AS Economics, since we have just grasped the topic of foreign exchange.  

I'm sure that the stress Mr Taylor placed on the importance of being passionate, driven and confident will benefit everyone who listened to the talk.  Even if they do not desire a career in this industry.


Wednesday 12 March 2014

Diane Coyle educates us on the History of GDP


On Thursday 6th March, students of the Epsom College Economics and Enterprise Society travelled to the acclaimed Eton College, where we were educated on the measurement of economic and social progress by Diane Coyle OBE. Mrs Coyle is a freelance economist and author of the newly published GDP: A Brief but Affectionate History. Her talk consisted primarily about the shortcomings of GDP as a measurement of economic and social growth; she brought to our attention the extent of unrecorded economic activity including the informal and intangible economy. For example, the disregard of housework: if we included housework in GDP, our economy may be nearly double the size, however the government discount it on the grounds that it’s too difficult to record. The second half of her talk consisted of possible alternatives to GDP, which included Human Development Index, Happiness, or measuring what is important to the population. What fascinated me the most was the measurement of happiness. She noted that in Bhutan, instead of calculating GDP, the government measure Gross National Happiness (it’s even illegal to mention GDP). This evaluation of happiness is an attempt to unveil the quality of life using not only economic terms, but psychological terms, which seems only fitting – social welfare should be accounted for when assessing the extent to success of an economy. A booming economy with an unhappy population may not represent full potential or achievement. Ultimately, Diane’s conclusions that we should measure economic activity (GDP), social welfare, and sustainability were thoroughly convincing, and has certainly made me think more about the social and psychological sides of economics.

Wednesday 12 February 2014

The Financial Crisis: Lessons Learnt



Mr Phizackerley’s talk focused mainly on the Global Financial Crisis of 2008, explaining in detail - yet in understandable terms – the causes and events of the Crisis and how it connected to the current European Crisis.  This was of particular interest as it was useful in making connections to current economic problems today, such as high unemployment rates in Spain. He also touched upon the system of banks, their different sectors and how they work- again offering understandable and useful knowledge to those who attended. For those of us who were perhaps slightly too young to understand fully the reasons and consequences of the financial crisis, it was helpful in establishing an understanding of how “greed and fear” can cause so much damage. It was astonishing to see through his graphs how quickly the situation deteriorated, particularly in the housing market. Mr Phizackerley’s talk was also useful in demonstrating the different sectors that economics is needed for in banking, and therefore offering potential job ideas that were perhaps unexplored before. When answering questions at the end, especially with regards to the term “banker bashers”, he helped by offering firsthand experience that, although banking did have its downsides, he still believed it to be one of the most exciting jobs out there today. Overall, Mr Phizackerley’s talk offered us a greater knowledge of a crisis that beforehand we were perhaps vaguely aware of, but now fully understood its causes and consequences that are still occurring today.  His personal experience could be used by students to see potential careers, and as a whole was thoroughly interesting.