Boris Johnson’s attempt to reinstate his prime minister has been hit twice after gas prices rose the most in 17 years, and a major international think tank said the country’s economy The UK would stop next year.
Fears that Britain was heading for a prolonged period of stagnation in the style of the 1970s intensified amid new evidence of the damaging impact of the war on Ukraine on the cost of living and growth.
The Organization for Economic Co-operation and Development (OECD) pointed to the cost-of-living crisis as the fall of the UK to the international growth league table. He said the UK would be the weakest economy in the G7 group of major industrial nations next year.
In the latest turn of inflation, motorists are facing the imminent threat that the cost of filling the average family car will reach £ 100 for the first time, after the cost of a liter of petrol went increase Tuesday 2.23 pence to over 180 pence.
Data firm Experian Catalist said a similar increase on Wednesday would lead to a £ 100 breach of the barrier. Some yards already sell petrol for over £ 2 a liter, including a BP garage on the A1 near Sunderland which cost £ 202.9.
Average diesel prices are also at an all-time high of 186.6 per cent. Tuesday, 1.4 p.m. up from Monday. Higher diesel prices have a significant impact on the economy as a whole because companies often use fuel to fill vans and trucks. Before the invasion of Russia in late February, gasoline and diesel were around 150p.
With ministers suspicious of the reaction from drivers, Downing Street told petrol retailers they could face an investigation by the competition control body if there was evidence that the 5p reduction per liter of the fuel tax announced by Rishi Sunak in his March mini-budget was not being done. transmitted.
Inflation has already reached a 40-year high of 9% and the OECD said it would continue to rise to over 10% by the end of the year.
Despite demands from some Conservative MPs, Sunak has no immediate plans for tax cuts and intends to wait until the fall budget before introducing another support package. The Chancellor and the Prime Minister will outline plans in the coming weeks to boost growth through measures such as improving skills and increasing British investment in research and development.
The UK economy will grow by 3.6% in 2022 and there will be zero growth in 2023, according to the Paris-based OECD, with an average inflation rate of 8.8% this year and down to 7, 4% in 2023.
The forecasts, contained in the OECD’s six-month economic outlook, represent a sharp drop from the estimated growth of 4.7% this year and 2.1% next year six months ago.
Laurence Boone, the chief think tank economist, said the UK was being hit by a combination of factors including higher interest rates, higher taxes, reduced trade and more expensive energy.
The OECD said the UK was expected to move from being the second fastest growing economy in the G7 industrialized nations group after Canada this year to the slowest growing in 2023. Japan, Germany, Italy, France and the United States are the other members. of the group.
A spokesman for the UK Treasury said: “Thanks to the support we provided during the pandemic, the UK had the fastest growth of the G7 last year and our unemployment rate is the lowest it has ever been. in almost 50 years.But we recognize that many people will be concerned about these forecasts.
“While we cannot completely isolate the UK from global pressures, our economy is in a strong position to meet these challenges. We have a growth plan and we are supporting people with the cost of living.” .
Rising gasoline and diesel prices have been attributed to rising fuel demand worldwide, including in China and the United States as Covid restrictions eased. Declining capacity at refineries has also kept pump prices high, while oil has fallen from peaks at the start of the war in Ukraine.
Business Secretary Kwasi Kwarteng last month wrote to cutting-edge retailers “to remind them of their responsibilities” to pass on tax cuts to motorists. He said it was “unacceptable for different locations, even within the same retail chain, to have very different prices.”
He asked the Competition and Markets Authority to examine the matter. The CMA spokesman said: “The CMA has said that if they find evidence that the cut is not happening, it would mean that competition is not working and they could start a formal investigation. Obviously, we would support them wholeheartedly. looking at all possible options. Transparency can play an important role. “