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Fuelling Business

Is your business struggling to cope with rising fuel prices? The average price of unleaded petrol this week hit a record high, according to government figures.

Record High

The average price of unleaded fuel was at 137.3p per litre at the beginning of the week, over a penny rise from the previous week. The price of diesel also hit a new high, at 144.7p per litre.

Petrol prices have been driven up by the cost of oil, which has risen due to tensions with Iran over their nuclear plans and further exasperated by unrest in the region. Though the price of oil has not risen over its high from 2008, weakening of the pound against the dollar has meant UK oil prices have been buoyed up by unfavourable exchange rates.

Businesses Hit

Many businesses reliant on fuel for their day to day running are being hit hard. The transport sector has been particularly hard hit. A recent survey showed that 47% of haulage businesses felt rising fuel costs were a major concern on a daily basis.

One haulier told BBC News his expenditure on fuel had risen by over £200 000 in the last few years. In a business where margins are razor thin, it is hard to cope with any rise in price without passing the expense on to customers.

With consumers and businesses alike reining in their spending, any price rises that are passed onto customers can result in lost business. SMEs are particularly hard hit, as any reduction in flexibility can take huge chunks out of their profits.

Fuel Duty

An independent report into fuel costs has submitted findings to the government which reveal that cutting fuel duty taxes would be a ‘win-win’ for government and businesses alike.

By cutting fuel duty by 2.5p per litre, hauliers and truck operators could save £300 million per year. This could allow them to reinvigorate growth and recruitment, creating 180 000 jobs in the first year. It would also increase UK GDP by an estimated 0.3%.

With the 2012 Budget soon on the cards, all fingers are crossed for a cut in fuel tax. Hopefully this could go some way to support objectives of growth and recovery.

 

 

Select Factoring.

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