The original plan was for a three-way merger, but the third partner, Murphy of the US, pulled out of the provisional agreement earlier this year.
Gulf and Elf would have had a combined 1,000 service stations in the UK and two oil refineries. The collapse of the planned deal, announced last November after British Petroleum had merged similar businesses in the UK with Mobil, is a serious blow to both companies which have been faced by falling profit margins in the notoriously competitive petrol market. “The response in the market has not been as catastrophic as you might have expected, but it is all very messy.”Martin Brookes at Goldman Sachs agreed. “It is difficult to see a clear path through the next six months. The uncertainty has increased dramatically,” he said.The French election result, the Bundesbank’s reaction to the German government’s intention to plough on with the revaluation of its gold reserves, and the Inter-governmental Conference in mid-June all present potential flashpoints.By Monday morning a little of the mist will have cleared after the second round of the French election at the weekend..

That showed such a contempt for democracy,” he said.Robert Lind at ABN Amro predicted a prolonged period of volatility. But I am enjoying the discomfort of all those people who were saying it was a done deal because the political will was there. “The political commitment to the project seems as strong as it ever was. The next decisive event will tip it one way or the other,” said Julian Jessop at Nikko Europe.He said the early election in France and the German government’s gold revaluation plan had been huge errors of judgement. Underlying profits, excluding pounds 47m of exceptional drought costs in 1995, rose by 3.1 per cent..

The dramatic events in France and Germany this week make it less likely that a single currency will start on time in 1999, according to the Independent’s weekly poll of economists. The nine-strong panel says that the probability of EMU starting on schedule has fallen from 69 to 60.4 per cent in the last week. The probability of a delay, meanwhile, has risen from 23 to 30.6 per cent.
Michael Lewis, of Deutsche Morgan Grenfell, described the probability of EMU going ahead on time as “all or nothing now”. Germany, he said, faced a choice between delay, and the flight to the mark that would follow, or pressing ahead and accepting a softer value for the euro. Faced with the damage a stronger mark would cause its exporting industry, he believed Germany would settle for the current timetable.There has been no week in the history of the single currency project that delivered more drama than the past seven days. First, the French Socialists made their dramatic gains in the first round of the election last weekend, making this Sunday’s results more important than anyone imagined when President Jacques Chirac first called the election.Then the Bundesbank launched its “nuclear attack” on the German government, accusing Theo Waigel, the Finance Minister of accountancy more creative than the Italian government’s. Anybody who knows what the Germans think of Italian fiscal uprightness will know what a calculated insult that was.

Mr Waigel is now likely to face a confidence motion.Yet the uproar has had surprisingly little effect on the financial markets. The reason, according to The Independent’s panel, is that markets are in two minds about whether the events make it more likely that EMU will go ahead with a very broad membership, including Italy, or more likely that it will not happen at all.”The events have pushed the markets towards the two extremes, all or nothing. The new investment went to build a water grid to link up with Northumbrian Water.The group ended a week of water company results with a 33 per cent rise in pre-tax profits in the year to the end of March to pounds 215.8m Yorkshire raised its dividend by 19.4 per cent. “It would be an exaggeration to say the windfall tax would have a significant impact on prices,” he said.Yorkshire revealed it had spent a further pounds 110m on the aftermath of the 1995 drought crisis which forced the company to bring water into areas with a fleet of 700 tankers at a cost of pounds 33m. We don’t want to be hit twice,” said Mr Wilson.Brandon Gough, the chairman, played down the possible impact of the windfall tax on customer prices. The proposals reduce the value of tax allowances for long-term investment, hitting utility building programmes particularly hard, and would raise up to pounds 1bn by the end of the decade.
Yorkshire’s submission to the Labour Government on the windfall tax has included a request for the Treasury to abolish the tax changes.”It was widely hailed as quasi windfall tax. Brian Wilson, Yorkshire’s finance director, said the measure in Kenneth Clarke’s last budget in November would ultimately raise the company’s tax bill by pounds 7m a year and amounted to a disguised windfall tax.

Yorkshire Water has offered the Treasury a “deal” on the utility windfall tax, linking its opposition to the levy with a plea for the Chancellor to abandon measures put in place by the previous government which will raise utility tax bills. The Northridge earthquake was one of two big catastrophes.Motor insurance began what is expected to be a continuing decline into the current year as competition from direct insurers such as Direct Line put increasing pressure on premiums. Profits fell from pounds 175m to pounds 117m and motor syndicates at Lloyd’s are forecasting losses in 1995 and 1996.Aviation insurance turned in a pounds 148m profit (pounds 138m) as higher rates were offset by a number of airline and aerospace losses.. There were few catastrophes and the majority of syndicates enjoyed good profits. The return on premiums was 44 per cent.Non-marine, the biggest insurance sector at Lloyd’s, saw a fall in profits from pounds 881m to pounds 837m as rate increases in the UK were offset by continuing soft conditions in the US. At the end of 1995, before the reconstruction and renewal programme that effectively saved the market took effect, the comparable percentage was 138 per cent.Sir David said Lloyd’s had just completed consultation on its proposals for further strengthening the society’s chain of security, the systems put in place to underpin its underwriting.