I have heard that there is now a 'home grown rule' ie teams must field a certain number of British?/English? Players. Is this correct? If so can someone explain the details?

Almunia has dual nationality and is therefore legally fully British when in Britain and Spanish when in Spain, so it would be difficult to see any problems in that case - anything else would be discriminatory.
I would expect that in the "match day squad" we would pretty much always have Almunia, Bond, Doyley, Deeney and Hogg plus one or two of McGuigan . Murray and (when they return) Nosworthy and/or Hoban, so we can satisfy this rule without compromising the competitiveness of the squad.
As long as they spend 3 years in an English academy, they count as home grown
So where would that leave players like Andy Hessentaler, Kevin Phillips etc - English born but came into the game late having never gone through an academy?
As long as they spend 3 years in an English academy, they count as home grown
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If it is true that foreign players are better than English ones, forcing clubs to have English players will inflate the price of them compared to non-English players. It will also reduce the competitiveness of English clubs in European competitions.
I'm surprised that EU law does not forbid an "English only" rule
Not according to the regulations Frenchie posted. They also mean that a boy born in England but moves to Scotland, say, before he signs up with an FA affiliated club is not home grown. The regs also mean that someone who has never been out do England bur switches from rugby to football when they are 19 are not home grown.
I would also be interested to see an analysis of the economics of this. If it is true that foreign players are better than English ones, forcing clubs to have English players will inflate the price of them compared to non-English players. It will also reduce the competitiveness of English clubs in European competitions.