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By Andrew Redmond Barr
The UK Government has been urged to take immediate action to stimulate growth after France announced moves to cut fuel prices.
Scottish National Party Treasury spokesperson Stewart Hosie MP has said that the UK Government should take France’s lead to help boost economic activity with a reduced tax on fuel.
Earlier this year a report conducted by the Centre for Economic and Business Research (CEBR) concluded that even a small fuel tax reduction of 2.5p per litre would encourage greater economic activity and create 180,000 jobs over five years.
The report also suggested that increased economic activity would make up for any drop in Government income from the cheaper rates.
The French Government has made a deal with producers and distributors to decrease the cost of fuel by 6 eurocents per litre for three months. The temporary move is intended to aid economic growth in France whilst more long-term measures to curb fuel prices are put into place.
The UK currently has the highest rate of fuel tax in the European Union taking up 60 per cent of the final price.
Mr Hosie, who led a successful cross-party campaign against a further 3p rise from the Treasury earlier this year, said:
“This decisive and immediate action from the French government contrasts with a UK Government which continues to sit on its hands while the economy flounders.
“While the French are cutting the cost of fuel to boost economic activity, the Tories and Lib Dems indulge in little more than cuts to the poorest and gesture politics to their party faithful. Their inaction may explain why latest growth statistics show both Germany and France outperforming the UK, despite the troubles of the eurozone. It’s clear the UK's double-dip recession is very much down to economic mismanagement from the UK Government.
“The French government has recognised that high fuel costs are hammering businesses and households and choking back growth. Yet fuel tax is even worse in the UK, where we have the highest rates of tax on both petrol and diesel in all EU countries.
“The SNP led a successful cross-party campaign at Westminster which forced the Treasury to halt a further three pence rise in fuel duty. But this damage-limitation alone is not enough to stimulate growth. We need a package of measures from the UK Government, including capital investment in infrastructure projects and a fuel duty regulator to protect from rising fuel prices in the long term.
“Rather than arguing amongst each other, the coalition needs to stop dithering and take decisive action to get the economy moving.”
Figures from the Weekly Oil Bulletin by the European Commission show that UK fuel has the lowest pre-tax price in the whole of the EU at 703.98 euros per 1,000 litres. Fuel tax, however, is the highest in the EU at 59.4 per cent, creating a final fuel price of 1,028.41 euros per 1,000 litres.
Contrast this with the second-lowest pre-tax fuel price in the EU, Romania, where the final price per 1,000 litres is only 598.33 euros, forty per cent lower than the UK.
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