When it comes to fuelling an economic recovery, maintaining the current low price of diesel should be a priority for the government.
With prices already starting to rise, I’d urge chancellor Rishi Sunak reduce fuel duty over the next 12 months to compensate for any increase at the pumps
With most goods in the UK carried by road, such a measure would keep transport costs low, stimulate production, and provide an economic boost for businesses and consumers alike.
The low cost of diesel during lockdown – from a low of 111ppl in early June to the current average of 117ppl – did ease the financial burden placed on the haulage and logistics industry as it overcame the challenges of Covid-19 to keep this country running.
Maintaining lower diesel prices means that cheaper transport costs can be directly passed on to both businesses and consumers, bringing positive and wide-ranging benefits to the economy.
Everything we eat, use or wear has at some point been transported, so fuel taxes affects absolutely everything we consume. Therefore, maintaining lower fuel costs would have the widest possible benefits.
Such a policy would also offset the effects of what is likely to be a prolonged period of low wage growth – by making incomes stretch further.
It would also reward those businesses that are producing in-demand goods and encourage higher outputs which, in turn, would lead to the creation of more jobs.
The government would also benefit, as growing economic activity would also see an increase in tax revenues, which would offset any lost fuel duty.
In the UK fuel duty on diesel remains by far the highest in the EU and this has a direct impact on the profitability and competitiveness of haulage companies. Logistics is the lifeblood of our economy and any return to high fuel prices in the short term would only dampen the economic recovery.
It would also be a fitting tribute to all those key workers within the logistics industry who worked throughout lockdown to ensure this country was able to continue to function by protecting their livelihoods and creating some market certainty.
I would ask the chancellor to seriously consider maintaining the lower cost of fuel, certainly over the next 12 months, as a simple and effective way of not only boosting the transport sector but the country as a whole.
Caroline Moody, MD, Moody Logistics and Storage
