Patagualino,
Ships like this under the UK flag reverse nothing - the vessel's owners are a shell company set up in the UK to meet the requirements of the flag, the profits go overseas. Ships like this will never see a British crewmember and will not use UK repairs yards and the like either. To me they bring no value except a quick buck based on their tonnage.
Personally I'd rather the flag remained decimated than have it's proud history tarnished with the tonnage tax, which has indeed made the UK flag an FOC.
Oddly enough, the EU has made many proposals to protect it's indigenous seamen and industry, e.g. cabotage style rules. Guess which country is ALWAYS against them - yes the good old UK.
To answer your quesiton, the Union Flag ends up on the stern of a ship like this because the only UK national who normally sees this ship or be involved in it's management or crewing is the MCA flag state inspector, who chances are is of Indian extraction.

Correct Gentlemen!
How on earth does the Union Flag come to be on the stern of this Merchant vessel?
As for being a "posh" FOC.... Well, that's debatable.
But maybe it helps slightly reverse the decimation of the "Red Duster", Merchant UK Fleet.
But yes, at least it is NOT the flag of the EUSSR! That would be an insult too far!
Besides, Benjamin Franklin was in the main "American"...yes, he spent time in London:
As a spokesman for the colonies!
(Tongue in cheek dear readers: When all else fails: Keep Calm & Carry On.)

At least its not the EU flag !!

Allan

Being a British ship means little these days, it's merely a posh FOC complete with tax dodge for the owners.

Pity she's flying the wrong flag, should be the Red Duster on the stern.