The chancellor’s announcement, that he is suspending his planned 3p-per-litre fuel tax increase was a welcome U-turn along his road to austerity.
Despite the reduced forecourt prices of the last few weeks, its implementation would still have had a huge impact on both businesses and individuals alike.
Chancellor Osborne has stated publicly he has done it for the sake of the country, but in reality, he was facing discontent from his own MPs, the popular press, campaigning groups like FairFuelUK and from knowing there were reports that even the prime minister was becoming increasingly uneasy over the lack of public appetite for such a rise in fuel tax.
The economy of a country is driven by the demand for, and availability of, the products that are being produced. Consumer demand is driven mainly by price and if the cost of delivery to the shops is ever increasing, the goods will remain unsold. Such consequences have been more than evident over the past 2 years with companies folding and unemployment rising.
While banks continue to be over cautious with their lending to businesses, we need some core stability in our costings. The chancellor has provided some of that – at least for now!
The danger, however, still remains. His proposed increase is only suspended for the rest of 2012; he is very likely to revive his plan in the New Year unless the campaigning continues.
It’s important that once we finish celebrating, we must re-focus and prepare for the next attack on what is such an easy ‘cash cow’ – the road user!
You can almost guarantee the government will, once again, try to milk it dry!
(picture courtesy of HM Treasury)