Sunak & Hunt are more Tweedledum and Tweedledee than shock and awe. The flip-flop on the fracking ban undermines the UK's creditability as an investment destination, which is magnified further by policy changes and punitive approach to oil & gas, which includes the Energy Levy. Given that it is likely that Labour will form the next government, the Tweedledum and Tweedledee double act is likely to be moved to Dumb and Dumber. All these factors are undermining long-term investment confidence, making investment difficult to justify. Nevertheless, this dislocation is resulting in select opportunities for investors, which will create significant returns, despite the fiscal dislocation. This notwithstanding, the outlook remains Negative.
April 17, 2023
Europe - North West
Western Europe island between the North Atlantic Ocean and the North Sea; northwest of France.
The fiscal regime that applies in the United Kingdom (UK) to the oil and gas industry consists of a combination of corporation tax, supplementary charge, petroleum revenue tax and more recently, the Energy Profits Levy.
The terms of the UK’s future relationship with the EU seem to be improving with the "Windsor Agreement," but just because there are rules, doesn't mean that the EU will follow them, so the jury is still out. UK legal, regulatory, and accounting systems are transparent and consistent with international standards. The UK legal system provides a high level of protection and private ownership is protected by law and monitored for competition-restricting behaviour.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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