Logistics UK has warned that reversing the current cut in fuel duty would deliver a major inflationary shock to the economy, adding hundreds of millions of pounds to industry costs and pushing up prices for consumers.
Ahead of next week’s Budget, the business group said logistics companies, which depend heavily on diesel to keep supply chains moving, would face at least £480 million in additional annual costs if the temporary 5p-per-litre reduction in fuel duty were withdrawn. Acting Chief Executive Kevin Green said fuel was an unavoidable core expense for operators already grappling with rising costs and margins “as low as 1%”, leaving them with no option but to pass higher charges down the line.
Mr Green said logistics firms already contribute around £6.3 billion a year in fuel duty, and urged Chancellor Rachel Reeves not to increase the tax burden at a time when businesses are only beginning to see signs of recovery. He warned that any rise would flow directly into higher prices “right across the board”, risking a setback to early economic growth.
He stressed that logistics underpins the functioning of the entire economy and must be protected if it is to play its part in driving national recovery. “Nothing moves without it,” he said, adding that companies lack the financial stability needed to invest in new technology, fleet decarbonisation and workforce training.
Mr Green said increasing the sector’s tax burden now would be “counterproductive”, and called on the Chancellor to maintain the current cut in fuel duty in the November Budget to safeguard supply chains and support long-term growth.