Foreign investment in the UK energy sector fell to a 12-year low, with
foreign-backed projects halving to 27 last year, Ernst & Young data showed. Oil
and gas projects fell to three from 16 a year earlier. The Labour government has
paused new North Sea drilling and retained a windfall tax on oil and gas
producers; the sector is braced for Chancellor John Healey’s first budget, where
tax rates may rise further, and uncertainty remains over approval of new
drilling licences. An Ernst & Young survey of foreign investors cited high UK
energy costs as the biggest deterrent, along with concerns about political
stability and high labour costs; respondents identified an uncertain economic
outlook—covering growth, interest rates and public debt—as the principal risk to
UK attractiveness over the next three years.
