The UK’s annual budget announcement, to take place tomorrow, is one of those elaborate, egregious pieces of political staging that the country’s parliament does so well. The speech itself is so heavily flagged as to be somewhat irrelevant, and the main sport these days is placing a bet on the length of time the chancellor takes to deliver his goods — tip: four-time incumbent William Gladstone holds the record for the longest speech, clocking in at four hours 45 minutes in 1853. The odds reflect the unlikelihood of anything less than an hour.
Thanks to the UK electoral cycle, this year’s budget is more significant than usual. It comes just six weeks before voters give their verdict on the country’s unusual experiment with coalition rule. Given the straitened times, chancellor George Osborne’s ability to throw the electorate a juicy bone may be limited. One thing seems certain, though, and that is a change in approach to the North Sea.
Not that long ago, Osborne decided to raise taxes on the sector, a move that generated much wailing and gnashing of teeth among companies exploring and producing in the UK North Sea. But if a week is a long time in politics, four years is a geological period. Back in 2011, Brent changed hands at $111/bl, double today’s price. Tomorrow, the industry’s intense lobbying seems likely to pay off, with the mood music indicating a chunky rolling back of the tax burden.
For Osborne, the UK Treasury and whichever party is running the country after the election, oil industry cash is still needed in the nation’s coffers. Politicians of all stripes hope what Osborne comes up with will be enough to lift North Sea confidence from six-year lows and turn around a situation described by Opec this week as “bleak”.
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