FSB: Fuel prices are crippling small firms

Small businesses are struggling in light of the increase in fuel duty and the rise in VAT, it has been stated.

The Federation of Small Businesses (FSB) said the government needs to honour its pledge for introducing a fuel duty stabiliser because the cash flow of smaller firms is being hit.

Future fuel duty increases should also be scrapped, it stated, adding that the UK currently has the second highest diesel price in Europe.

Almost half of the cost of the average litre of diesel is tax, the organisation noted.

"Small firms, such as the haulier and the taxi driver, will all be severely affected by this rise in fuel duty," explained FSB national chairman John Walker.

He added big businesses can avoid passing extra costs on to customers, who have already been hit by the VAT rise.

More than 70 per cent of small firms told the FSB they expect the rise in VAT from 17.5 per cent to 20 per cent to have a negative effect on their business.

Use the myfinances.co.uk comparison site to keep your bills low.