The United Kingdom has seen drastic political reform over the last month. We’ve left the EU, Boris was running for Prime Minister, then he wasn’t, now Theresa May is our new leader and as we enter her reign, she has began to make significant changes to her cabinet.
This upheaval will undoubtedly have consequences, both positive and negative, on our economy. We will be met with a period of instability both within exchange rates and how those on the continent treat us in terms of trade, but what we want to know is, how will this affect the price of fuel? Will motorists suffer a price hike with the latest economic situation?
Well, George Osborne has created an emergency budget that ensures we can cover the costs that Brexit might occur, and within this budget is a 5% increase in fuel duty.
It is estimated that there could be a gap of £30 billion to fill following the UK leaving the EU, and Osborne’s budget suggests motorists and the transport system could be the biggest losers. On top of the 5% petrol rise, there will be tax raises across the board as well cuts of 5% to the transport budget.
It was almost inevitable that should the leave vote prove victorious last month, we would see a definite rise in fuel prices in the immediate aftermath of the result. Not only will Osborne’s proposed 5% tax increase hamper the relatively low cost of fuel at the time, but the devaluation of the sterling would prove a significant hindrance. I don’t think the economic forecast predicted quite how fast this drop would happen, and our economy saw the sterling suffer its biggest drop since the mid-1980s. This becomes a notable cause for concern when oil is purchased using dollars, so overnight the cost of petrol to the UK rose.
In terms of the long-term costs, like much of the economy, we face uncertainty and instability in this uncharted territory. We cannot say that the price of fuel will continue to rise, nor can we say it will return to its pre-referendum cost. A lot will depend on how well (or if) the sterling manages to bounce back in the global economy. The cost of Crude oil itself has actually dropped in the wake of Brexit although this could be attributed to a temporary market shock and may well return to its original price in the very near future.
Uncertainty seems to be the best way to describe the current mood surrounding the cost of fuel, keep your eyes peeled for more news on petrol prices and make sure you shop around to find the best value fuel!