UK becomes sick man of Europe once again

In the coming days, it’s been suggested five oil and gas giants could collectively announce £160bn in a profit bonanza. If so, the public mood could harden even further. Profits are one thing, profiteering quite another.

And, of course, soaring energy prices are due to the human tragedy that is Vladimir Putin’s war in Ukraine, which have helped boost Shell’s profits to a record high: £32bn in 2022. Labour has dubbed such returns “windfalls of war”.

Last year under heavy pressure, the UK Government rightly introduced a windfall tax on energy firms to help lower gas and electricity bills.

Shell has been able to offset most of this levy against decommissioning costs and investments in UK projects, facing £100m in tax for 2022 and £400m in 2023.

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In its defence, the UK-registered company insisted that making its record profit meant it was “well-positioned to be the trusted partner through the energy transition,” and pointed out its total profits tax was 75%, made up of the 35% windfall tax, 30% corporation tax and a supplementary 10% tax.

Nonetheless, given the turbulent economic times Britons are enduring, none of this will cut much ice.

Understandably, opposition politicians seized on the latest numbers and called for a bigger windfall tax to help scrap the hike in the energy bill price cap due in April.

The TUC’s Paul Nowak branded Shell’s profits “obscene” while Sharon Graham of Unite said Shell shareholders were “laughing all the way to the bank,” and noted how the firm’s “£5bn of dividends would go a long way towards paying for a 10% wage hike for NHS workers”.

Now, there’s a thought. If the PM announced that proceeds from an increased windfall tax would be channelled directly into a one-off payment for NHS workers, might he kill two political birds with one stone?

But Downing St, while it said it “absolutely” understood people’s anger over Shell’s record profits as they faced soaring energy bills, admitted it was “not aware of any plans” to use any increased windfall tax to help fund wage rises for public sector workers. But that’s not strictly ruling it out.

The PM’s spokesman also said the 75% tax rate was comparable to other North Sea tax regimes and was one that “strikes a balance between funding cost-of-living support while encouraging investment to bolster UK energy security”.

Earlier this week, Ms Graham called for an emergency windfall tax on the big banks’ “excess profits,” which, thanks to interest rate rises, were put at almost £20bn for the first nine months of 2022.

“Our economy is broken,” declared the union chief. “Nothing symbolises that better than the spectacle of politicians demanding pay cuts from nurses whilst doing nothing to get City noses out of the ‘banking-billions’ trough.

“It’s time the profiteers and their friends in the City were told profiteering won’t pay and it’s time they paid their fair share.”

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Yesterday, more unhappiness was loaded onto households as the Bank of England upped its base rate to 4% with lenders putting up mortgage payments although Governor Andrew Bailey offered a silver lining: inflation down from 10% to 4% by the year-end and a shorter, shallower recession. Small mercies.

As the industrial war of attrition rages on between Government and trade unions, the long-suffering public has to cope with a dysfunctional Britain, where things don’t work and household costs remain high.

It seems the UK Government is playing for time; hoping, perhaps, unions blink and voters become tired of relentless industrial strife.

The fact that not all striking unions took industrial action on Wednesday might suggest, in particular, health workers are wary not to dent their public support; some people could consider combining strikes on a single day overtly political.

One poll suggested a wide range of public sympathy depending on the sector. There was 60% support for striking nurses with 25% opposition. For rail workers, the respective numbers were 37 and 39, for teachers 44 and 33 and for civil servants 32 and 39.

In another snapshot, when asked who was to blame for the continuing strikes, 57% said the UK Government.

As Mr Sunak marked 100 days in power this week, the IMF soured the atmosphere further by predicting Britain would be the only major economy to plunge into recession this year with a 0.6% contraction. Remarkably, even sanctioned-hit Russia is set to outperform the UK.

While Chancellor Jeremy Hunt sought to accentuate the positive, noting how Britain had outperformed many forecasts last year, Putin must have been chuckling into his late-night vodka at all the economic trouble his war in Ukraine is having on the UK.

Yet in a few months’ time the Kremlin tyrant might be crying into his late-night vodka if the West’s military help for Ukraine succeeds as hoped and a public backlash begins to take hold in Russia.

The IMF prediction that Britain would be the only major economy to plunge into recession this year soured the Prime Minister's 100 day benchmark (Image: PA)

Of course, Britain is not alone in experiencing industrial strife. This week French public sector workers, including rail workers and teachers, took strike action against their Government’s plan to raise the retirement age from 62 to 64.

Emmanuel Macron and his government are facing more strikes next week too. Their big fear is a repeat of the 2018 so-called “Yellow Vest” protests, which sparked violent clashes with the police.

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The many afflictions hitting the UK at present – some more harshly than in other countries – will have a cumulatively negative effect on voters’ minds ahead of the 2024 general election.

For some, they may revive the old label, that Britain has become the “sick man of Europe” and, if the strikes drag on, might revive the old question “who governs Britain?”

And we know where such matters left governments in the 1970s – kicked out of office by an increasingly disgruntled and disillusioned electorate.