UK Government Expected to Delay Planned Fuel Tax Rise to Ease Cost of Living
Fuel Duty Policy and Economic Impact
Planned Fuel Tax Rise and Government Response
LONDON, May 16 (Reuters) - British finance minister Rachel Reeves plans to announce next week that she will postpone a planned rise in tax on motor fuel that is due to take place in September, the Sun newspaper reported late on Saturday.
Temporary Reduction in Fuel Duty
A temporary reduction in fuel duty, first introduced in 2022, is due to expire in September, which would increase fuel prices by 5 pence (6.6 cents) per litre.However, British governments have repeatedly extended the reduction, most recently in November's annual budget, and the Sun said Reeves was poised to do so again.
Government Insider Comments
The newspaper said a government insider had told it: "They have been looking at fuel duty."
Official Statements and Market Context
Finance Ministry Response
Asked about the report, a spokesperson for Britain's finance ministry said: "We do not comment on speculation."
Global Oil Price Trends
Global oil prices have risen by around 60% since the start of the Iran war at the end of February.
Cost of Living and Fiscal Considerations
Government Priorities and Revenue Implications
Prime Minister Keir Starmer and Reeves have both stressed the importance of reducing the cost of living - which opinion polls show is a major concern for voters - but fuel duty is an important source of revenue, raising 24 billion pounds in the last financial year.
Budget Forecasts and Potential Shortfall
Britain's budget watchdog bases its forecasts on stated government policy of increasing fuel duty, but said in March that if the government followed past practice of not raising fuel duty, there would be a 3.6 billion-pound annual tax shortfall in future years.
Market Reactions and Political Uncertainty
Bond Market Movements
British government bond prices tumbled on Friday, pushing 10-year borrowing costs to their highest since 2008, partly on investors' concerns that a leadership challenge to Starmer will either make him spend more or result in him being replaced by a more left-wing figure from his Labour Party.
Exchange Rate Information
($1 = 0.7507 pound)
Reporting Credits
(Reporting by David Milliken in London; Editing by Matthew Lewis)
