Sunday, 13 March 2016

early easter egg or am I over reacting?


The latest from our ultra-politically driven chancellor is that there will need to be a further dollop of money found to cover his apparently newly discovered spending gap of a further £18bn. Probably another example of attempting to cut ones way to greatness?

Osborne reveals this all at the last minute as if it is some surprise, when anyone with sufficient interest and a pocket calculator could have spotted this gap (or the more likely £27bn gap) months ago. What he does in his role and with all his experts to support him is something of a mystery.

None of it really makes a lot of difference in a situation where the upcoming budget will be probably driven by easter eggs of opportunism, maybe some new sell-offs and even repurchases as well as the need to preserve a position for that part of the government that George and Dave represent.

So with easter approaching, I'll use the metaphor of an egg cracking. This is another one of George's projects and might be one really ready for a U-turn. First, take a peek at the Areva constructed Flamenville EPR, used to build EdF's over budget and late reactor.

Areva let their carbon-weakened steel reactor shell be installed and covered in metres of thick concrete in the hope that no-one would notice. They have, though, and Areva has tanked (excuse the fission pun), and some may expect to see it merged with EdF, no doubt to contain the problem.

George may also be paying attention to this, because last year he announced the spend for Hinckley Point's reactor to be built on the same model as the French one - indeed by the same people, with additional input from the Chinese.

Before the undoubted overrun, the amount involved is, yes, £18bn.

Different money and different NPV, of course. Although, like all of George's gaps we should assume they will just keep growing.

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