41. Weekly Newsletter
Rising Gas Prices
The business secretary, Kwasi Kwarteng, this week put in a formal request to the Treasury to support industries hit by soaring energy costs (according to the BBC). Sectors such as steel manufacturing have requested a ‘price cap’ similar to the one available exclusively to members of the public. In the first quarter of 2021: the price per therm (gas price) was around 50 pence but this has now risen to 227 pence. The price cap for British households left many gas companies unable to cover their costs but businesses buying gas are not covered by this policy.
Britain’s gas shortages have a wide range of causations but with the nation already paying a higher price for gas compared to many of it’s neighbours: further increases are unwelcome. One of the causes for rising costs was the cold winter in Europe last year which added pressure to continental gas supplies and resulted in reduced levels of gas being stored. Furthermore, the UK has fewer gas storage facilities than many countries which thus has created a dependency upon the wholesale market- leaving the country exposed to sharp price rises. A potentially politically induced causation has been attributed to Russia, one of the two major gas supplying nations, allegedly restricting gas output to limit supply in order to promote a new gas pipeline (called Nord Stream 2).
The Newspapers & COVID
The UK’s newspapers, over the last week, have focused upon a wide range of headlines but the general theme paints an unfortunately pessimistic outlook. One of the positive newspaper front pages, delivered by The Telegraph, highlighted the PM’s ambition to rebuild the UK as a “high-wage country” but this is rumoured to be partly through pushing the minimum wage up to £9.42 per hour. Monday (11th October) featured other front pages warning of permanently “higher food bills”, the PM on holiday in Spain, a ratio of 2,038 patients per NHS GP (up 5% over last 6 years), and investment in UK steel plants.
Over 8.15m people in the UK have tested positive for COVID and with almost all restrictions lifted: cases remain fairly level but are gradually increasing. A total of almost 138,000 deaths have been attributed to the virus. Nationally, 49.19m people (about 90% of the eligible population) have received their first vaccine and around 45.20m of these patients have also received their second dose. This brings the total number of inoculations carried out, by the private sector and National Health Service, to 94.4 million.
Global Corporation Tax at 15%
Around 136 countries, over the last week, agreed to sign up to a historic deal to enforce a corporate tax rate of at least 15%– this also includes a fairer system of taxing profits where they are earned. Governments, including the UK, are now evidencing their concern that multinational companies are re-routing their profits through low tax jurisdictions. Previously, Ireland had been a voice of opposition to the deal and currently taxes corporations at a rate of 12.5%; however they have now agreed to the policy which could rake in an extra £108bn for governments in tax each year.
The new global policy is due to be implemented from 2023 and will aim to tax multinational companies operating within a country’s borders, even without a physical presence of the firm. Countries such as Kenya, Nigeria, Pakistan and Sri Lanka have not signed up to the agreement; it is also worth noting that the new minimum tax rate only applies to companies with turnovers beyond EUR750 million.