The UK Chancellor of the Exchequer, Rachel Reeves, is expected to announce in the coming days a delay in the planned increase of the fuel duty, which was previously scheduled for September. According to reports, the decision has been made amid rising oil prices and concerns about the cost of living for citizens.
This is reported by Finway
Reasons for Delaying the Fuel Duty
The temporary reduction in fuel duty, which has been in effect in the UK since 2022, was set to end in September 2026. This would have led to an automatic increase in fuel prices by 5 pence (6.6 cents) per liter. However, the government has repeatedly extended the reduced duty, most recently in November during the annual budget announcement. Sources indicate that Rachel Reeves is prepared to extend the duty relief once again.
The newspaper reported that a government insider told her: “They were considering the fuel duty issue.”
Implications for the Budget and Economy
Global oil prices have risen significantly—by nearly 60% since the start of the war with Iran in late February. Prime Minister Keir Starmer, along with Chancellor Rachel Reeves, has repeatedly emphasized the importance of measures to reduce the cost of living, as surveys indicate this is the main concern for British voters.
At the same time, fuel duty remains a significant source of revenue for the treasury: in the last financial year, this tax generated £24 billion for the budget. The UK’s budgetary authority bases its forecasts on government plans to increase the duty. However, it was noted in March that if the government again decides not to raise the tax, the shortfall in tax revenues could reach £3.6 billion per year in the coming years.