Displaying items by tag: windfall tax

The UK could be heading for a recession. The economy contracted by 0.1% in March, and higher prices are ‘really beginning to bite’, the Office for National Statistics said. People are spending less in shops and cutting down on car journeys; the impact of higher energy bills in April has also yet to be seen. Many price rises are just starting to hit households now. Last week the Bank of England forecast that inflation could reach more than 10% by the end of the year. It warned the UK faces a ‘sharp economic slowdown’. The chancellor has threatened to hit energy companies with a one-off ‘windfall’ tax if they don't invest enough in new projects. Opposition parties want to tax the soaring profits of oil and gas firms to help families grappling with rising bills. Treasury officials have been ordered to examine a potential tax, and Boris Johnson said the Government would have to look at the windfall proposal if not enough investment was made.

Last week you prayed for ‘wise costing and balancing by energy firms, oil giants and the government so that the cost of living remains stable’, after oil giant Shell announced profits four times higher than last year. This week BP reported its highest profit for eight years. The very same energy prices that have spelt crippling bills for consumers have prompted BP's boss to describe his operation right now as a ‘cash machine’. A combination of resurgent demand and geopolitical tensions means that wholesale gas prices are five times higher than before the pandemic - while oil prices have almost doubled. BP and Shell could make £40bn in profits this year, enough to cover the energy bills of the majority of UK households, renewing calls for a windfall tax. But the Chancellor fears it could damage investment in lower-carbon forms of energy, because energy giants' profits, tied as they are to global prices, are very volatile.