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Fuel duty will ‘hamper’ smaller firms

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Small businesses could find themselves laying off workers and cutting down on investment if fuel duty continues to rise, a leading business group has warned.

The Federation of Small Businesses (FSB) has said that a snap poll of 400 small firms found that 89 per cent believed that the increase in fuel duty will add, on average, an extra £2,000 to their costs over the next six months.

To cope with the rise in expenses, almost a third (62 per cent) said they would need to raise prices to offset the costs if fuel prices continue to climb, while a quarter anticipated freezing wages. Worse still, one in ten reported they would to consider reducing the size of their workforce. A third claimed that spiralling costs would have an adverse impact on business investment, and 78 per cent forecast a dent in profits as a result.

The FSB has been calling for the Government to introduce a fuel duty stabiliser, a mechanism to ensure an automatic freeze on fuel duty increases and a reduction in duty to match any increases in VAT revenues from higher pump prices. The FSB also wants all future fuel increases to be scrapped until a stabiliser is put in place.

At present the government has not reversed the planned increase in duty of 1p in April – some commentators are suggesting that the actual increase will be more like 3-4 pence per litre.

John Walker, the FSB’s national chairman, said: “The Government has said it is looking to the private sector to put the economy on a firm footing, but the hike in fuel duty is doing the opposite and hampering small business growth. With future fuel duty rises looking likely, small firms are just going to be left trying to survive.”

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