Prime Minister considers extending fuel duty discount amid rising oil prices
The Prime Minister has suggested the 5p fuel duty discount could carry on for longer amid worries about the Iran war, reports BritPanorama.
The proposed tax hike is currently “under review” as the ongoing conflict in the Middle East has prompted a surge in fuel prices. Recently, there has been increasing pressure from both Reform and the Conservative Party on the government as the public faces challenges related to the cost of living.
The 5p fuel duty cut, initially introduced in response to Russia’s invasion of Ukraine in 2022, is expected to end gradually starting in September under existing plans. However, the Prime Minister indicated a willingness to reassess this timeline in light of developments in Iran.
The current plan involves adding 1p to pump prices in September, followed by increases of 2p in December and another 2p in March 2026. In the wake of increased tensions, unleaded petrol prices have risen by 3.5p per litre since US-Israeli strikes on Iran began.
While oil prices surged to £89 per barrel, they have since moderated to about £67 per barrel. Nevertheless, elevated energy costs will likely result in higher expenses for consumers, including increases in grocery bills and holiday prices.
Economic analysts project that the anticipated two per cent inflation rate for the end of the year could see an additional one per cent increase attributed to these rising costs.
The situation underlines the interconnectedness of global conflicts and domestic economic challenges, with policymakers weighing immediate fiscal responses against longer-term budgetary considerations.
In summary, the potential extension of the fuel duty discount reflects ongoing concerns over how international tensions are reshaping economic policy in the UK.
