(Bloomberg) --
A windfall tax on British utilities is “very short-sighted” and could risk billions of pounds of future investment in the UK, according to RBC Europe Ltd.
Such a levy could cost the country £100 billion ($125 billion) by 2030 if it discourages investors, RBC analyst John Musk wrote in a note. A large element of the government’s Energy Security Strategy would be “at risk” if the plans went ahead because of lower confidence in future investments.
Chancellor Rishi Sunak has asked officials to look at a windfall tax on electricity generators, as well as oil and gas companies, according to reports. That’s in response to record high energy prices that have led to big profits for generators but surging bills for households across the UK.
Read More: UK Utilities Plunge on Reports Sunak Working on Windfall Tax
Among the most impacted firms would be Drax Group Plc, according to a note by Morgan Stanley analysts including Christopher Laybutt and Sarah Lester. Drax hasn’t spoken to the government about the tax and is focused on its bioenergy and hydropower developments, a spokesperson said in an emailed statement. Its shares dropped as much as 19% on Tuesday, the biggest fall in almost seven years.
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