Amid a cost-of-living crisis, the UK is lagging behind many of its European Union rivals when it comes to easing the burden of high fuel prices. Data received by motoring group RAC has shown that among the EU countries that have cut petrol taxes since March, only Luxembourg and Croatia have done less for drivers than Britain.
The 5p per litre cut introduced in the Spring Budget by former chancellor Rishi Sunak trails behind Germany’s 25p per litre, Italy’s 21p and Portugal’s 16p. Meanwhile France and Spain have introduced forecourt discounts of 15p and 17p per litre respectively. Luxembourg and Croatia cut petrol prices by 4.5p per litre, ending at the bottom of the chart for petrol and diesel respectively.
Britain also dragged behind most EU countries that did not implement any tax cut as nine out of 15 already have a cheaper fuel duty than the UK. “This analysis lays bare an uncomfortable truth for the UK government – that compared to other European countries, it’s pretty much done the least to support drivers through the current period of record high fuel prices, said the RAC.
Prices have started to drop a little in recent days following pressure on retailers to reflect the drop in wholesale costs that started a few weeks ago. Commenting on the research, a Treasury spokesperson said the 5p per litre reduction was the government’s “biggest ever cut to fuel duty” and saved the average UK driver around £100.
Fed-up drivers had staged a series of demonstrations, going back to July, blocking major arteries in protest of alleged profiteering by forecourts which failed to pass on the fall in wholesale gas prices.
Meanwhile the UK has gone into the early stages of a drawn out recession that will tip millions of households into financial crises, reveals new forecasts. The inflation surge driven by an unprecedented rise in energy bills will steer the economy into recession this quarter and keep it there until the early months of next year, according to the National Institute of Economics and Social Research (NIESR), Britain’s oldest independent research institute.
The economy will shrink by 0.1pc this quarter and 0.5pc in the final quarter of this year and the first quarter of next year. Professor Stephen Millard, deputy director for macroeconomics at the NIESR, said: “The UK economy is heading into a period of stagflation with high inflation and a recession hitting the economy simultaneously.
People have lost around £110bn in real disposable income since the financial crisis, dealing a huge blow to their capacity to weather the present cost of living crunch. The poorest households will be forced to raid all their savings to pay for basic necessities, doubling the number of families with no savings to 5.3m by 2024. The new prime minister, Liz Truss takes office at, indeed, a difficult period for the country.
Some 1.2m households will be unable to buy food and cover energy bills with their income without more help. Average annual energy bills will climb to a peak of over £3,700 next spring, according to Cornwall Insights. The NIESR called for reinstating the £25 universal credit uplift installed during the Covid-19 crisis. It also called for the £400 energy bill grant to climb to £600.
Inflation will climb to a peak of 11pc later this year and surge above 15pc next year, according to a top think tank, Resolution Foundation, who said governor of Bank of England (BoE) Andrew Bailey and the rest of the monetary policy committee (MPC) face “a protracted period of challenging policy making”. (The writer is our foreign correspondent based in the UK)
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