Will the EU windfall tax change how the UK deals with rising energy prices?
The European Commission’s example will increase political pressure on the government to relent over its opposition to such a tax, writes Sean O’Grady
A little more than a decade ago the banking crash and subsequent euro crisis was supposed to break the European Union. Around six years ago, Brexit threatened to destabilise the union again. So did the migration crises. And later so did the Covid-19 pandemic. In February this year, the Russian invasion of Ukraine and the energy crisis triggered another period of doubt.
And yet the European Union, for all its flaws and tribulations, is still standing. The sanctions on Russia, the drastic severing of gas supplies to Europe, and the soaring cost of hydrocarbons were supposed to have placed such intolerable strains on any sense of solidarity that the political independence of Europe would be threatened. Nato was the backstop in the face of a Russian steamroller that at one point was heading westwards.
Yet now, the EU and Nato are stronger and more aligned; and the European Commission has secured agreement among member states for a windfall tax on energy company profits to “cushion the blow” of the crisis. Some €140bn (£121bn) will be raised from the levy, which will help to defray the huge cost of supporting households and businesses in the EU from the effects of the shortages.
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