Everybody knows that ex-Tesco boss, Sir Terry Leahy, is no fool. But he was particularly profound this week when he directly blamed recent catastrophic falls in retail sales on the cost of fuel. 'I don't think people fully appreciated what an oil shock we've had. Filling up the family car has gone up 70% in two years causing what was a steady recovery to go sideways'. And he's right, the epic rates of UK fuel duty have become a crippling tax on consumption, stopping us using our cars to shop and driving up costs for businesses and industry.
Leahy also said that the Bank of England's Quantitative Easing policy actually drove up oil prices. The extra liquidity created went into oil speculation and not the general economy. Markets and speculators caused commodity inflation by buying oil futures for quick profit and hiked up crude prices across the world. Call me old fashioned, but I believe that the Treasury knows all this stuff. They realise what's happening out there, the effect of all these complicated market dynamics, yet they stay resolutely silent. They also know that our economic recovery is critically dependent on the price of petrol and diesel. If fuel costs don't go down the economic recovery will flatline and millions more people will lose their jobs. Why then, are they doing nothing? By cutting fuel duty (even by five pence) they know that they'll stimulate the wider economy, encourage consumer consumption, lower business costs, reduce inflation and create a badly needed feeling of confidence. Why, oh why, are they being so impossibly and incredibly stubborn?