20 March 2013 14:31 [Source: ICIS news]
LONDON (ICIS)--UK Chancellor of the Exchequer George Osborne promised on Wednesday to introduce tax relief measures for shale gas exploration, as part of the country’s latest Budget announcement.
Osborne said: “I am introducing a generous new tax regime [for the industry], including a shale gas field allowance, to promote early investment.
“Shale gas is part of the future and we will make it happen.”
The UK was an early adopter in Europe of shale gas exploration, but the practice was suspended in June 2011 after several small earthquakes in northwest England. Osborne announced intentions to establish a dedicated office for shale gas, to be known as the Office of Unconventional Oil and Gas, in December last year.
A London School of Economics think tank, the Grantham Research Institute on Climate Change and the Environment, said earlier this week that the UK should use shale gas to help to reduce the carbon emissions level of its energy sector, but should not expect prices to fall significantly.
Osborne also announced increased investment in capital projects, including an additional £3bn (€3.5bn, $4.5bn) per year for infrastructure spending, and £3.5bn in capital spending over three years for shared equity loans to people looking to buy homes. Prospective homeowners may also be offered a loan of up to 20% of a property’s value as a measure to stimulate the housing sector.
Construction and industry are key end markets for chemical products.
Companies operating in the UK’s North Sea oil territories are also to receive decommissioning relief on projects in the area.
Osborne announced that he will allow the Bank of England’s Monetary Policy Committee (MPC) to use unconventional methods to help the UK economy, although the country’s inflation target is to remain at 2%.
He said: “I want to make sure that an active monetary policy plays a full role in supporting the economy, so I am setting out an updated remit for the Monetary Policy Committee, and a review of the monetary policy framework.
“The new remit recognises that [the] MPC may need to use unconventional monetary instruments to support the economy while keeping inflation stable,” he added.
The UK’s GDP growth forecast for 2013 has been cut to 0.6% from 1.2% in December, Osborne added, while predicted growth for 2014 has been reduced to 1.8% from 2.0%.
(€1 = £0.85, $1 = £0.66, $1 = €0.78)
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