Updated: Low fuel prices boost economy, new report from FTA shows

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Freight Transport Association says a report it part-funded has shown that lower petrol and diesel prices throughout 2015 have given the economy a huge boost.

The study, commissioned by FairFuelUK and published this week by the Centre for Economic and Business Research (CEBR), found that low forecourt prices raised UK GDP by 0.6%, stimulated an extra £11.6 billion of economic activity, created 121,000 jobs and boosted Government tax revenues.

FTA, a founder member of FairFuel UK, has written to Chancellor George Osborne twice in recent months to stress the importance of keeping fuel duty low in his Budgets to support the logistics industry and stimulate the economy.

It says the new research confirms that the suspension of the Government fuel duty escalator has increased tax revenues to the Exchequer by a net gain of £1.3 billion – had it been in place, the extra cost to the economy would have been £4.9bn.

Howard Cox, founder of FairFuelUK said: "George Osborne should look at this data very carefully indeed.

"We’ve provided clear evidence-based proof that lower transport costs of 2015 have significantly benefited everybody, including the Treasury and there’s now no argument left not to reduce fuel duty.

"Any plans he may have to penalise drivers for using diesel cars, vans and trucks will backfire badly and hit businesses and families with a shocking £9.3 million bill.” 
Oliver Hogan, CEBR director, added: "While the continuation of the fuel duty escalator would have brought in additional indirect taxes over the past year, the Government would have been trading off the boost to economic activity and jobs for increased tax revenues.

"Given the fragility of the economic recovery, this would in hindsight have been an unwise policy."

The FTA's submission to the Chancellor ahead of his Autumn Statement calls for a 3p per litre reduction in fuel duty to ease cost pressures on domestic road freight, stimulate economic growth and create jobs.

James Hookham, deputy chief executive of FTA, said: "The Chancellor’s Autumn Statement on November 25 will be the biggest test of George Osborne’s commitment to economic recovery for years.

"The link between fuel prices and growth was confirmed by the Treasury’s own modelling last year and now CEBR’s evidence, part-funded by FTA, shows just how big the gains were and the economic folly of resorting to fuel duty or VED increases in order to balance the books or supposedly ‘punish’ users of diesel fuel.

"With economic growth slowing this year, the Chancellor needs to listen to the numbers not the slogans.”

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