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FirstFT: Hunt to raid electricity generators with new tax

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Jeremy Hunt is preparing a raid on electricity generators with a new tax on their “excess returns” as he tries to find money to pay for an inflation-linked rise in benefits and pensions while extending help for households with energy bills.

The chancellor will also use Thursday’s Autumn Statement to lift the existing windfall tax on oil and gas companies — known as the “energy profits levy” — from 25 per cent to 35 per cent, while extending it for another two years until 2028.

The government had been considering a “revenue cap” on electricity generators in line with a similar move by the European Union.

Now Hunt is preparing a tax of 40 per cent on the “excess returns” from the sector above a certain price per megawatt hour, according to people close to the discussions. That threshold has not yet been decided.

The two windfall taxes are expected to generate more than £45bn over six years, although the final figure will depend on energy prices.

Do you agree with Hunt’s new windfall tax on electricity generators? Let me know at [email protected] Here’s what other readers had to say about whether Thursday’s Autumn Statement would ease the cost of living:

“My pension statement yesterday for retirement in 2024 showed big losses. It is painful, but we have to cope with less” — Chris Keates Lewis in Ashtead, UK

“More taxes on people earning under ‘roughly’ £1mn and belt tightening on public service will lead to a worse recession, less spending and less growth” — Ben Cobley in Portsmouth, UK

“Living as I do in a country with more than 84 per cent annual inflation, and receiving a Turkish lira salary, with a family to support, I do find it somewhat funny to see people in the UK complaining of 10 per cent” — Julian Bennett in Ankara, Turkey

1. HMRC sues EY over alleged misrepresentations The UK’s tax authority is suing the Big Four accounting firm over alleged misrepresentations made during the negotiation of a tax settlement relating to British property investor and Conservative donor Jamie Ritblat.

2. CIA director warns Russia against nuclear weapons use In the first known in-person meeting between senior US and Russia officials since Vladimir Putin’s invasion of Ukraine, Bill Burns “conveyed a message on the consequences” of using nuclear weapons, the White House said yesterday.

3. Amazon to cut 10,000 jobs The ecommerce giant plans to axe about 3 per cent of its corporate workforce in an effort to cut loose lossmaking or underperforming units of its business, a person familiar with its plans said. The news came the same day as former chief executive Jeff Bezos pledged to give away most of his $124bn fortune.

4. FTX bankruptcy case stalls Sam Bankman-Fried’s crypto exchange had not filed so-called first-day motions to formally commence bankruptcy proceedings as of yesterday, according to court records, reflecting disarray inside FTX after it sought US court protection from creditors last week.

5. World population reaches 8bn The world’s population reaches 8bn people today and will hit 9bn in 15 years as it experiences an unprecedented surge in the number of pensioners, according to the latest UN data. It also showed the global median age had increased about eight years to 30 since 1950 and was set to rise to 36 by 2050.

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The day ahead

G20 summit Seventeen leaders of the world’s largest economies are expected to attend the gathering in person, united by fears about runaway inflation, geopolitical instability and energy shortages. Although Vladimir Putin has decided not to join the meeting, which begins in Bali today, the Russian president will dominate discussions about his war in Ukraine.

Belgian court rules on GFG A court in the city of Liège will decide whether to take control of two steel plants held by Sanjeev Gupta’s GFG Alliance and put them up for sale following a request by a court-appointed judicial observer.

Economic indicators September unemployment data is set to show the UK still below pre-pandemic levels. Another “winter of discontent” is looming as a range of workers, most recently nurses, demand pay rises in line with inflation. The EU’s third-quarter gross domestic product estimate is also expected to point to a contraction ahead of winter.

Corporate earnings Vodafone publishes interim results. Shareholders will be looking at the amount the British telecommunications company has been able to cut after announcing the sale of its stake in Vantage last week. Other companies due to report include Imperial Brands and Infineon Technologies. View the full list here.

US-China Economic and Security Review Commission report The US congressional committee will put out its annual report, which is likely to be more hawkish about decoupling than in the past, writes Rana Foroohar.

Donald Trump announcement The former US president has teased a “very big announcement” scheduled today at his Florida Mar-a-Lago estate. Trump is expected to declare his intention to run in the 2024 presidential election, but a lacklustre performance by candidates he endorsed in the midterms poses a setback to his ambitions.

What else we’re reading and watching

Cracks in the US Treasury bond market As recession looms and most asset prices face a dramatic sell-off, the world’s most important debt market is creaking once again. With the meltdown in UK gilts exposing the vulnerability of bond markets, can the US survive a wave of selling?

The global housing market is heading for a brutal downturn At the end of 2021, things looked rosy for the global housing sector. Arguably, there had never been a better time to own a home. Not even a year later, the sector is now braced for the broadest slowdown since the financial crash.

As world’s eyes turn to COP27, Egypt battles climate change The host of this year’s UN conference is “extremely vulnerable” to global warming, according to reports cited by the World Bank, with farmers struggling to make ends meet in unpredictable weather that is now the “new normal”.

Britain’s tussle over medicines Pharmaceuticals bleating about UK pricing is hardly new, particularly from US companies used to the inefficient largesse of their own system. But the sector may have a point about a new deal to limit the size of the NHS drugs bill, writes Helen Thomas.

Qatar’s World Cup legacy In our latest FT Film, we look at what the football World Cup means for the country, and what will happen to stadium infrastructure and the Fifa tournament after. For more on the business of sport, Premium subscribers can sign up for our Scoreboard newsletter.

Video: Qatar’s World Cup legacy | FT Scoreboard

Wine

Ridge Vineyards, the Silicon Valley winery founded by four Stanford scientists in their spare time, celebrates its 70th anniversary this year and the FT’s wine critic Jancis Robinson was invited to taste some of its vintage bottles as part of the festivities.

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