Tuesday, 30 August 2016

£13 billion fine for Apple for Irish Sweetheart tax deal

A big fine, worth around €3250 to each Irish citizen.

The US are already unhappy because Apple plays as little tax as possible in the USA and is now daring to pay some in Europe too. Not that Apple will mind, might be quite a relief given the huge cash they have built up and limited investment opportunities open to it.

What of Ireland though...the EU is clearly stepping in, rightly, to stop a sweetheart deal in an economic zone of freedom of capital movement. Other companies may be dissuaded from signing such deals and moving there in the future.

Which all makes sense in the EU zone. It does present an opportunity for the UK; attract Apple with a low rate sweetheart deal and get them to base in the UK post-Brexit. Exactly the kind of mercantilist policy Germany has been using for years via the EU.

Interesting choices for Ireland coming up,  its corporate back taxes, it should go to Ireland, but no doubt the EU will try and claim it as a fine for the EU coffers.

All this on a day when France followed Germany in pulling out of TTIP trade negotiations with the USA too. Brexit shares still moving up, EU ones down.

Sunday, 28 August 2016

UPDATE: Chief EDF Frog Back on the Case!

Well blow me, if it isn't the Chief Frog, right on cue!  The Telegraph is obviously hoping for another run of EDF radioactive-turd ads because they have given him a clear run at the propaganda slot: and what rot he is spouting. 
"The Government said it will take a short time to consider the project. That is understandable and I fully respect the decision ... 
... and have just this week been released from three weeks in the clinic after a major attack of apoplexy: now, I'm back in action to threaten you with Chinese Displeasure.
"China’s participation is much more than £6bn of inward investment. It brings the benefits of a 30-year partnership between EDF and CGN in nuclear construction in China, a country with the largest civil nuclear programme in the world"
Sounds nice - for EDF, at least.
"We know and trust our Chinese partners. Beyond that, the UK independent nuclear regulator has only granted Hinkley Point a nuclear site licence after being satisfied that security has been properly addressed. All staff on nuclear projects are rigorously vetted, wherever they come from. As is standard practice, the control systems at Hinkley Point C will be isolated from IT systems and the internet"
Touching stuff.  Hope it's all as secure as the works entrance to Hinkley Point (photo). Writing as someone who has frequently been on the inside of utilities with this approach to IT, I can safely say that any contractor who has access to those 'isolated systems' (which would be quite a few, over the years) has ample opportunity for mischief.
"Once the new-build nuclear industry is restarted, costs are expected to fall for future projects"
OK mon brave, you can come back when you don't need a subsidy and we'll be pleased to see you.  Bon courage with that.


Friday, 26 August 2016

Silly Season Over: Energy Troubles Ahead

I am not one to shout "the lights are going out" too readily, because the government will always make the Grid do whatever it takes, however costly & stupid, to keep homes and hospitals supplied.  But while everyone has been marvelling at Olympic success /  Corbyn lunacy / mass drownings on the beaches of Britain, over the summer we have been tipped off that there could be some real problems for power and gas supplies this coming winter.

On the power side, the pace of closures of coal-fired power stations this spring really caught the authorities by surprise.  We were always going to be down to about 1% capacity margin in the depths of next winter, and now it's going to be negative - even after the Grid has bribed a couple of the coal generators to stay open for just one more season, which is the only thing they have come up with.

And on the gas side, the UK's only really big gas storage facility (the large offshore Rough field) has run into serious problems of old age.   Centrica (the owner) is nursing it back into a few more years of reduced operations, hopefully in time for winter: but we know of old what happens in a cold snap when Rough falters - it's at very least a peaky spot-price spike.  We just about got away with it during a cold snap three years ago.  Next winter, anything much more than a week's worth of extreme cold and we may be (a) completely reliant on some fortuitous LNG cargos becoming available in the Atlantic (= not so cold in Spain + Eastern USA), or (b) stuffed.

[Rough isn't the only large and ageing provider of gas flexibility in winter we won't be able to rely on in future: the mighty Groningen field in the Netherlands, Europe's biggest for over 50 years (sic), and the very large Norwegian Troll are both ailing.  In the Dutch case, the hammering of Groningen for decade after decade is now causing fairly noticeable earthquakes.] 

The real killer will be winter 2017-18.  This game of keeping coal plant on life-support cannot be repeated indefinitely: it's in the nature of large capital assets of the steel'n'concrete variety that once they've been fingered for closure, discretionary maintenance work stops and the whole thing becomes a self-fulfilling prophesy.  Recall also that back in 2008 the EDF Chief Frog said that by 2017 we'd be cooking Christmas lunch on Hinkley Point C electricity, because otherwise the lights would be going out.  Well, he lied about HPC but otherwise he knew that of which he spoke.

Yes folks, it was broadly forseeable way back then (which was when we started blogging about it!), but neither Labour nor the Coalition did anything serious about it.  Takes a while for those plump Xmas turkeys to come home to roost, but they are on the horizon - and they may escape the lunch table altogether.


Will anything happen with Hammond as Chancellor?

I am hearing that the new Chancellor is not planning to do much with the Autumn statement. Really as a new Government in fact, one would have expected quite chance of doing something radical to show a difference to Osborne's non-austerity austerity.

Instead, there is a huge problem with Heathrow where Theresa May is very exposed in her own constituency of Maidenhead, who are deeply anti-expansion. Yet Gatwick seems to be off the menu as BAA have been so successful with their lobbying for Heathrow or bust.

In terms of the economy, it desperately needs some change of tack from the low-rates, low-savings, low growth model created by the Cameroons.

The chance is to boost growth by raising infrastructure spend and relaxing planning laws further. Also to end the pensions triple lock which is denuding many areas of Government of any cash.

However we are likely to get further tax cuts for business, which have so little impact on business investment when personal taxes are so high (most business are privately owned, the personal tax always ends up being key for 99% of people).

Then there is the long overdue review of both public sector pensions provision and the personal tax code including NI. If not now, when?