Fuel Duty Rise will Slow Down Recovery for Small Firms
The latest 2p increase in fuel duty will hit small firms hard, and is likely to impact on economic recovery, the Federation of Small Businesses (FSB) has warned.
The rise is the third increase in nine months, and brings the average price of petrol across the UK to around 105 pence a litre.
Calling the fuel price increase an unwelcome overhead at “a very difficult time”, the FSB warned that it would set back business recovery for many firms.
“High fuel prices cause difficulties in every part of the economy, but small businesses that are dependent on cars, those who travel to their customers, or whose business is in haulage or logistics, are hit particularly hard,” said John Wright, National Chairman Federation of Small Businesses.
“Rises in fuel duty could have a devastating impact on the cashflow of small businesses at a time when they are already struggling with late payers and a decrease in trade. The Government should be looking at what powers it has to offset rises at the pump,” he added.
The price of petrol is expected to rise further at the end of this year, when VAT will return to 17.5 per cent from 15 per cent. The Government says the extra duty is needed to help fund investment in public services.
Jo Tanner at the Freight Transport Association said many companies in the logistics sector were already at “breaking point” because of high fuel prices.
“With oil prices already rising and many businesses on their knees as a result of the recession, is this really the best time to be increasing fuel duty, again?” she said.
Since last December, the freight transport sector had already seen its fuel bills go up by £800 million, Tanner added, while insolvency rates had increased by 50 per cent.