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Group warns 50,000 jobs could be lost in UK industry
by The Associated Press
Up to 50,000 jobs could be lost in the British oil industry over the next decade because of tax law changes announced in the government’s latest budget, an industry group warned May 23.
The U.K. Offshore Operators Association said that tax proposals announced last month by treasury chief Gordon Brown could cost the industry up to 8 billion pounds ($11.6 billion) by 2010. The changes include a 10 percent increase to 40 percent in the tax on profits.
The organization said investors would be deterred from exploring for oil and would look for new or emerging markets elsewhere in the world.
“Billions of pounds will be taken out of the industry and will affect the funds available to reinvest in the U.K.,” said the association, which represents the United Kingdom’s offshore oil and gas industry.
“We expect a sharp blow over the next eight years and the gradual erosion of activity. This decline of the industry will put up to 50,000 jobs at risk across the U.K., a significant percentage in Scotland.”
Expenditure projected to fall According to the organization, the U.K. oil industry supports 265,000 jobs through oil and gas sold in the U.K. and 70,000 through exports.
The association estimated that exploration and production expenditures in Britain, currently 8 billion pounds a year, could fall by up to 20 percent in the next eight years as a result of the tax changes.
The association, which is made up of 30 companies licensed to explore and produce oil and gas off the coast, said that despite the North Sea being a “mature basin” where about half of the oil reserves have been used, there are still opportunities for exploration.
The treasury department said May 23 the budget changes should not cut jobs because most companies will benefit from the new investment allowances.
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