Fuel duty rise will hit economic growth, says AA

Petrol pump
Image caption Haulage industry representatives are upset with the rise

The AA has said the government fuel duty that will increase the cost of a litre of petrol and diesel from Friday by 1p "will hinder economic growth".

It said the rise was unnecessary given the tough economic climate.

Hauliers' body the Freight Transport Association (FTA) also criticised the rise, calling the move a "smash-and-grab approach".

The FTA said the duty rise would add £125m a year to transport industry bills.

'Hinder growth'

The AA's president Edmund King said that now was not the time to be increasing the cost of fuel.

"This fuel duty increase highlights a series of contradictions that make it hard for drivers to accept.

"Pushing the petrol price almost to a level of the 2008 record high... could backfire as it will hinder economic growth."

Mr King said that with petrol and diesel prices at least 10p a litre higher than this time last year, the Treasury was already earning an extra 1p a litre through a VAT windfall.

'Fragile recovery'

The FTA also voiced concerns about the duty rise.

Above-inflation fuel duty rises since 2009 meant the freight industry faced "a disproportionate burden in narrowing the public sector deficit," it argued.

"With another rise due in January and above-inflation rises set for the next three years, many businesses hit hard by the recent recession will feel like they are on borrowed time," said FTA chief economist Simon Chapman.

"The price of oil is the highest it's been for three months and is set to rise further as we come into the autumn peak period of oil demand.

"With economic recovery still so fragile, now is not the time to compound the problem with artificial price hikes."

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