MARKET REPORT: Energy giants rocked by windfall tax hike fears as Britons face tough winter ahead
A chill ran through the boardrooms of Britain’s oil and gas companies as the Government hinted at plans to tighten its squeeze on their profits.
Bosses of the big energy companies have been summoned to a meeting today by the Chancellor of the Exchequer Nadhim Zahawi and Business Secretary Kwasi Kwarteng to justify their massive profits as energy bills are going through the roof.
Companies have been raking in cash when many consumers are having to choose between heating and eating.
Bosses of the big energy companies met with Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng to justify their massive profits as energy bills are going through the roof
Oil and gas firms have already been hit with a temporary windfall tax this year on profits from North Sea operations. The worry for them is that the 25 per cent windfall tax rate might be increased.
The Treasury is reportedly keen to close some loopholes in the proposed levy to raise another £5billion or so. James Cleverly, the Education Secretary, did the rounds of the TV interviews promising that Zahawi and Kwarteng would ‘knock some heads together’ and hold the energy companies to account.
It comes after energy market experts Cornwall Insight this week upgraded their forecasts for average annual energy bills, predicting they could now rise to more than £3,500 in October and over £4,200 in January.
Pressure is mounting on the Government to help hard-pressed consumers and it looks as if its preference is for someone else to foot the bill for handouts. BP fell 0.3 per cent, or 1.3p, to 421.25p, and Shell lost 0.7 per cent, or 15p, at 2169.5p.
British Gas owner Centrica was one of the worst performers on the Footsie, sliding 5.5 per cent, or 4.6p, to 79.52p, while elsewhere in the utility sector Drax dropped 5.5 per cent, or 43p, to 736p; SSE slipped 2.4 per cent, or 43p, to 1767p and National Grid dipped 1.2 per cent, or 13.5p, to 1139p.
The FTSE 100 rose 0.25 per cent, or 18.96 points, to 7507.11 but was overshadowed by the FTSE 250, which surged 1.94 per cent, or 385.6 points, to 20,298. Promotional products peddler 4imprint surged 10.8p, or 360p, to 3710p after a strong set of half-year results.
Demand was at record levels in the first half of the year and July activity was encouraging.
Half-year revenue shot up 58 per cent to £420million.
TP ICAP, a financial intermediary that executes trades for City institutions such as investment banks and hedge funds, soared 13.6 per cent, or 18p, to 150.5p after it posted a sharp increase in half-year profits to £72million from £28million the year before.
The company was set up by Michael Spencer, the billionaire former treasurer of the Conservative Party.
He is no longer involved with the company but it is performing strongly without him, benefiting from higher trading activity and volumes, driven primarily by monetary policy tightening to combat record inflation, war in Ukraine and recessionary risks in many countries.
Among a blizzard of company updates from insurance companies, car insurer Admiral caught the eye with a 12.6 per cent, or 248.5p, rise to 2216p.
Half-year profit halved from a year earlier to £251million but it said 2021 was an exceptional year and noted profits were up 19 per cent on pre-Covid 2019. Customer numbers rose 12 per cent year-on-year, despite what even Admiral admitted were ‘significant rate increases’ in its UK motor business in response to elevated claims inflation.
Wealth manager Quilter warned that current market conditions could result in a delay in it meeting its operating margin targets.
The shares retreated 3.3 per cent, or 3.95p, to 115.8p yesterday after it said that it faced the toughest trading environment since it listed in June 2018.