UK announces urgent fuel tax cut to fight cost of living crisis

cnbc.com:

LONDON — U.K. Finance Minister Rishi Sunak on Wednesday announced an immediate cut to fuel taxes and a longer-term tax reduction for workers in a bid to mitigate the country's historic hit to living standards.

In his Spring Statement, Sunak announced that fuel duty will be reduced by 5 pence per liter for 12 months, a cut he told Parliament will be worth £5 billion ($6.6 billion), starting from 6 p.m. U.K. time on Wednesday. The government hopes the cut will reduce the cost of gasoline at the pumps amid a surge in global oil prices.

The level of fuel duty, a substantial contributor to British public finances, has been frozen at 57.95 pence per liter since 2011.

Sunak also revealed plans to double the government's household support fund to £1 billion for those affected by higher energy costs.

Solar pumps, heat pumps and other similar measures will be subject to zero value-added tax (a tax on goods and services), down from 5%.

The pressure had been on Sunak to address the spiraling cost of living crisis in the U.K., with households facing record rises in energy bills and inflation running at multi-decade highs and expected to worsen as the fallout from the Russia-Ukraine conflict intensifies.

U.K. inflation came in at 6.2% in February, new figures showed on Wednesday, its highest since March 1992 and well ahead of consensus expectations among economists.

The Bank of England expects inflation to reach 8% in the second quarter, and has cautioned that double-figure prints are not inconceivable before the end of the year if Russia's assault on Ukraine and subsequent global supply shortages persist.

A planned 10% increase to National Insurance (a tax on earnings) kicks in for many workers in April, while at the same time the