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Fuel Duty Freeze Extended Again in Pre-Election Budget

In a move that is set to delight drivers across the UK, Chancellor Jeremy Hunt is poised to announce the extension of the 5p cut in fuel duty in the upcoming pre-election budget today (6 March).

This decision represents a significant financial commitment from the Treasury, estimated to cost around £5bn.

The "temporary" reduction in fuel duty, initially introduced by Rishi Sunak in 2022 and due to expire this month, was extended for 12 months in March 2023. Chancellor Hunt appears ready to continue this trend, marking another year where the government policy, which typically sees fuel duty rise in line with inflation, remains unimplemented since 2011.

The extension comes amid concerns from economists and official forecasters about the difficulty in predicting budget impacts due to the continued implementation of what was supposed to be a temporary freeze. Additionally, there are worries that the 5p cut is being exploited by retailers to increase profits, with the RAC reporting that retailers made an extra £184m from motorists in just two months by not passing the cut on to consumers.

The decision to freeze fuel duty and maintain the additional 5p relief allows Hunt and the Conservative government to position these changes as a tax giveaway ahead of the next election.

The budget will set the fiscal stage for the forthcoming nationwide vote, with the Conservatives eager for Hunt to cut taxes in an attempt to improve the party's polling against Labour.

However, the backdrop of high interest rates on government debt and low growth leaves little room for financial manoeuvrability. The Chancellor has hinted that public service funding may suffer to steer the UK towards lower taxes.

Alongside fuel duty, Hunt is also expected to announce a cut to national insurance, a move that would be cheaper than cutting income tax but would not benefit those who do not pay NI, including a significant Conservative demographic of pensioners.

This budget announcement is eagerly anticipated, as it will reveal the government's fiscal priorities and strategies ahead of the critical election period.


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