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CORPORATION CORONATION WHAT BRANDS GET WRONG AT GREAT BRITISH OCCASIONS P19 WEDNESDAY 3 MAY 2023
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LABOUR AND LIB DEMS CALL FOR EVEN BIGGER WINDFALL TAX AFTER BP ANNOUNCE HEALTHY PROFITS NICHOLAS EARL AND JESSICA FRANK-KEYES WINDFALL tax-backing politicians were yesterday described as “completely out of ideas” after calling for the already swingeing levy on North Sea operators to go further. The calls were triggered by healthy first quarter profits for BP of around £4bn, announced to markets yesterday morning. Labour’s shadow energy secretary Ed Miliband said the firm was enjoying the “unearned windfalls of war”, although analysts noted the price of natural gas is now lower than it was in the aftermath of Russia’s invasion of Ukraine. Lib Dem leader Ed Davey, meanwhile, said the profits were a “kick in the teeth” to Brits struggling with the cost of living. The so-called energy price levy,
introduced by then-Chancellor Rishi Sunak, hits North Sea oil and gas operators with an extra tax reflecting the significant increase in the wholesale price of energy in the weeks and months after Putin’s war began. BP said yesterday they paid around half a billion pounds in UK tax in the first three months of the year, just below a half of that due to the windfall tax.
Critics at the time said the levy would harm investment, despite a carve-out that allows UK-based investment to be in part written off. Those sceptics appear to have been proven correct with Harbour Energy, the largest North Sea oil and gas operator, blaming the levy for job cuts. CEO Linda Z Cook told City A.M. last night that the existing levy had “all but wiped out our profit for the year” and driven the firm “to reduce our UK
investment and staffing levels”. Her calls were echoed by some on Conservative benches. Douglas Ross, the Scottish Tory leader, said calls for a heftier windfall tax was “playing to the gallery” but stopped short of calling for an outright reversal of the policy, while Thatcherite Tory MP Sir John Redwood said the windfall levy had become a “further rise in general business taxation”. Michael Hewson, chief markets analyst at CMC Markets, said “politicians across our divide are completely out of ideas when it comes to dealing with the challenges facing the UK economy”. BP produced better-than-expected revenues and profits, though the fall in oil and gas prices in recent months is likely to be felt in the coming year. BP shares fell around four per cent on the day.
Regulator in move to give London edge CHRIS DORRELL THE FINANCIAL Conduct Authority (FCA) should be “praised to the rafters” after proposing a series of simplifications to the listings regime in the capital, the author of a review into the UK’s capital markets told City A.M. last night. The watchdog has proposed ditching the ‘standard’ and ‘premium’ listing segments of our public markets – which come with different requirements – in favour of a single class of commercial equity shares. Mark Austin, a senior lawyer at Freshfields and the author of the government-backed review, said the proposals “simplify the listing regime meaningfully”. The moves come amid growing concern that the capital is losing out on equity raises, with Arm the latest firm to look abroad. Chief executive of the FCA Nikhil Rathi (pictured) said: “Our proposed reforms would significantly rebalance the burden of regulation to the benefit of listed companies and investors who are willing to set their own risk appetite and terms of engagement.” The City of London Corporation also backed the proposals.
US regional banks pummelled as First Republic takeover fails to quell concerns CHRIS DORRELL REGIONAL banks across the US were under pressure yesterday as investors became increasingly nervous about the state of the banking sector despite JP Morgan’s acquisition of First Republic Bank. The KBW regional bank index,
which includes a range of regional lenders, shed 5.6 per cent. Pacwest Bancorp shares were down over 25 per cent, while Western Alliance was down 17 per cent. Larger banks were also down, although by not as much. Last night, JP Morgan shares were down 1.7 per cent, Citi 2.5 per cent, Bank of
America 3.0 per cent and Wells Fargo 3.7 per cent, with the sell-off indicating the First Republic rescue deal hadn’t immediately calmed investors’ nerves. Finalto’s Neil Wilson said: “It probably only ends when investors stop asking ‘who’s next?’ We ain’t there yet.”
Following the acquisition of First Republic, JP Morgan boss Jamie Dimon said the immediate banking crisis in the US was “over”, arguing that only a small number of banks were vulnerable to the specific range of problems that impacted Silicon Valley Bank and Signature Bank. But analysts said warning lights are
still flashing in the sector. “It is striking that even though the Fed’s emergency lending hasn’t expanded any further since the initial crisis in March, use of the Fed’s discount window remains extremely elevated,” Paul Ashworth, Capital Economics’ chief North America economist, said.
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