Fuel duty increase would be a road block for the economy says Logistics UK   

As Kevin Green, Policy Director at Logistics UK, explains, until alternative fuels are widely available and used across the industry, any increase in fuel prices would act as a brake on the sector’s potential to power growth and could have an inflationary impact right across the economy: “The most effective way this government could support our industry and help it to drive economic growth in the coming year is to not just avoid a rise in fuel duty, but to actually cut it.   

“Logistics businesses ensure our shops, businesses, hospitals and homes are supplied with the goods they need. Increasing the duty payable on fuel, with no viable business alternative currently available, would not just hit our industry at a time when many businesses are struggling as a result of increased costs, but also mean an inflationary knock-on effect to consumers, who would receive a double whammy of increased prices in the shops as well as at the pumps.  

“Rather than raising fuel duty, which would block off the growth our members could drive, we recommend Ms Reeves actually cuts it to kickstart increased economic activity and fuel growth across all sectors. With business uncertainty still high, a bold move is needed to support our members and ensure they can deliver confidently for customers and consumers.”  

According to Logistics UK, a 10p per litre cut in fuel duty will reduce fuel costs across the country by almost £5 billion* a year for both industry and consumers, which will allow businesses to invest and help drive growth.  

It would also help grow the economy through increases in consumer spending, putting money in the pockets of people up and down the country.  

“We are operating in sluggish times,” continues Mr Green, “growth is now predicted to be 1.1% during 2025 and our Logistics Report shows that overall business confidence has declined compared to previous years. In this environment, we need a brave and confident government to take the steps needed to jump start the economy.  

“A significant cut to fuel duty will free up levels of cash which can then be used to invest in the key areas that help keep the country trading – a move that would give the whole country the boost it needs to kickstart the economy.”  

Logistics UK’s annual Logistics Report 2025 shows that fuel duty generates £24.3 billion for the Exchequer with the logistics sector contributing £5.43 billion of this total.  

Fuel is a significant expense for logistics businesses, representing one third of the industry’s costs. Over 60% of respondent businesses surveyed for the report identified a reduction in fuel duty as the clear policy action they would like the government to take to help drive investment and growth. 

*Logistics UK’s analysis of fuel usage and fuel duty is calculated with the assumption that the amount of fuel used and number of vehicles remains constant and shows a 10p reduction in fuel duty will cut costs for businesses and consumers by approximately £4.7 billion a year.