Nick Clegg: 5p rise in cost of petrol down to Brexit

Last June, the price of petrol was 111.2 pence per litre. Last week, it was 1118.1 pence per litre. The price of oil takes care of about 2p of that. The  rest – around 5p – is due to the post-referendum collapse in the value of the pound against the dollar.

This 5p increase works out at £2.50 on a tank of petrol for an average-sized car, or £60 per year for the average motorist.

For hauliers, the impact of the increase in fuel prices is far greater, adding more than £2,200 per year for the average lorry. 85% of everything we buy is carried by truck, so the increase in fuel costs will push shop prices up too.

Nick said:

Theresa May claims that Brexit is going to be a great success. The reality is it’s going to make us poorer. The effects are already being felt.

Around 5p of the increase in petrol prices since last summer is down to the shockwaves from the referendum vote.

The rise in fuel costs will push up prices in the shops. This means consumers are going to be hit twice, once at the pump and again at the checkout.

The Conservatives are driving the country towards an uncertain future. Their extreme interpretation of the referendum result will see us yanked out of the Single Market, our best guarantee of economic stability. They are deliberately planning to put an end to barrier-free trade with the continent.

The consequences of this are going to be felt not by the wealthy elites but by ordinary people up and down the country. Fuel prices are just the tip of the iceberg.

This is why the country needs a strong opposition, and the Liberal Democrats are the only party committed to providing it.

We haven’t even left yet, but we know that inflation is up and the effects on our economy are only starting to be felt.

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24 Comments

  • What is he talking about. Tesco price for the past 72 hours at the local supermarket has been 111.9. It goes up and down and has virtually nowt to do with Brexit. This obsession with Brexit is taking us nowhere. Stick to a 1d on the tax for the NHS etc.

  • David Becket 9th May '17 - 1:36pm

    @ theakes
    I agree. Has he learnt nothing from the failure of project fear? Stick to the BENEFITS of the single market, promote our NHS policy and start talking about housing, education and the environment. If Nick cannot do better than this he needs to be taken out of the lead team.

  • Andrew Tampion 9th May '17 - 1:40pm

    I agree with the above comments, Mr Clegg also ignores the Bank of England decision to cut interest rates because of a possible down turn in the UK’s economy and further decision not to put them back up when the down turn did not occur.

  • Lorenzo Cherin 9th May '17 - 1:44pm

    I often defend Nick as a good and decent Liberal who made mistakes now best not dwelt on that very many in our party made with good intentions.

    Yet the same very many , again from left to right of it , are making it on Brexit , as is this site.

    It is good to read the reactions above.

    When May wins the massive victory even Tim is saying she looks like doing, is he going to then accept the public do not want to carry on questioning and picking at this .

    I support our party and its policies.

    Labour, yes them, are best in this campaign so far.

    Why are we not abolishing the wretched and cruel car parking charges in the NHS, and the TV licence like the Greens and UKIP?!

  • Chris Bertram 9th May '17 - 1:50pm

    Abolish car park charges in hospitals, and in many places the spaces will fill up with (a) commuters, and (b) staff, leaving little or no room for genuine visitors. Solutions to this will be difficult and expensive, and the lost revenue will also have to be found from somewhere. Be careful what you wish for.

  • Chris Bertram 9th May '17 - 1:52pm

    theakes: “What is he talking about. Tesco price for the past 72 hours at the local supermarket has been 111.9. ”

    But it could have been about 106.9 if the pound had not collapsed against the Dollar. IS that really hard to understand?

  • @Lorenzo. There is a certain truth in what you say, but since June the party has been saying that there is no mandate for hard Brexit and the election has been called on the issue in order to settle the question.

    I think we’ll discover that there is no alienated “48%”, (a lot of the remain voters did so in the referendum through gritted teeth), but it doesn’t make sense for the party to backpedal at this late stage.

  • David Becket 9th May '17 - 2:03pm

    Richard S
    I do not think those of unhappy with Clegg are back peddling. Just promote the positive aspects of the Single Market and stop promoting Project Fear. It failed last time and it will fail now.

  • Opinion polls are dire. We are probably heading for another good hiding. Could be down to 5 MPs. Bit like 1955 and probably worse than 1970 and to a lesser extent 1979 where we did hit 14% in the last week. Only good news is that following those debacles we came back strongly in 1957, 1972 and 1981/2. Roll on 2019!!! (after 1970 and 1979 we did not change the leader)

  • Paul Murray 9th May '17 - 2:13pm

    Since May 2014 the Euro has fallen 30% against the dollar – from $1.36 in May 2014 to $1.09 today. This dwarfs the 13% fall in GBP against the dollar since June 23rd 2016. Do we take it that Mr Clegg is also criticising Mario Draghi and the ECB for the QE and ultra-low interest rate policy that is presumably causing such hardship to Eurozone drivers?

  • Ironically its 111.9 where I live

  • nvelope2003 9th May '17 - 3:03pm

    I do not think those who wish to leave the EU are the slightest bit interested in the economic cost. They seem to see themselves fighting the Second World War which drove Britain into national bankruptcy. Dislike and jealousy of the success of Germany are never far from their minds. It is probably too late to change the party’s policy and so we will have to live with the chance that this election could damage the party for the present and delay our recovery for some years as the Conservative party intentended.

    If Brexit turns out to be a mistake we would be unlikely to benefit as no one thanks those who have shown them to be wrong and we cannot really relish the thought of the economy collapsing even if the Conservatives are driven out of power.

    However, a study of the recent local election results shows that despite the small net loss of seats there were a number of gains and many of the losses in the South West could be attributed to the appearance of Labour and Green candidates who polled few votes but handed the seats to Conservatives who also benefitted from the collapse of UKIP. I rather think this was the intention of the Labour Party as they did not used to stand here in former times.

  • Peter Watson 9th May '17 - 3:19pm

    So Nick is saying that since the pound has risen against the dollar since Mrs. May announced a general election she is certain to win with a large majority, that Tory victory is a good thing. Shurely shome mishtake.

  • Libdem must remember how Campbell Bannerman won a landslide victory in 1906 by promoting the virtue of free trade (free food) instead of spreading fear.

  • Having read the article several times, I’m not sure what the fuss is all about. The pound went down against the dollar after the Brexit vote (fact). Oil is valued in dollars (fact). It follows that petrol, and anything else imported for that matter, will be more expensive. Sounds like very basic economics.
    References to Project Fear are becoming tedious. Am I right in thinking the term “Project Fear” was coined by those in favour of Scottish Independence in order to give people a reason for ignoring the reality of their situation ? Is it project fear when Labour accuse Tories of destroying the NHS ? Or Tories tell voters that Labour will crash the economy ? It used to be called political debate.
    Or is the whole thing just another excuse to go Clegg bashing.

  • Richard Dean 9th May '17 - 5:41pm

    A tenfold increase? Can it really be possible? Or would that be a typo? 😀

    Brexit is certainly tough!

  • Peter Watson 9th May '17 - 5:51pm

    @Chris Cory “Having read the article several times, I’m not sure what the fuss is all about.”
    The value of the pound (and what is a good value for it) is a nebulous concept so this is simply an attempt to make it a more concrete issue for voters to grasp.
    Obviously though it raises (at least) two issues:
    1. Emphasising that a falling pound is bad implies that the rise of the pound associated with a potential new Tory government is good which is surely a daft electoral message.
    2. Is deploying Nick Clegg to make these public statements a good electoral strategy for the party?

  • An interesting point about the 1906 election. Back then “free trade” in practice meant trade on terms set by Britain, primarily with the Empire (both formal and informal) which formed a large and protected market. In more competitive markets – mainland Europe and the US – the UK was already losing out quite badly and has never since found any good way to revitalise industry. The default plan is getting foreign firms to set up here or take over existing firms – hence the awful “open for business” slogan.

    With the empire long gone we can’t now adopt the policies we did then; Brexiteers appear to be in denial about this – who do they think will we sell to? Answer: it has to be largely the continuing EU, by far our largest trading partner and that means it will be on their terms or not at all. So, even the best Brexit possible (which was never likely and seems less so by the day) will mean that we lose our seat at the rule-making table but still have to stick to the EU rules. Doh! And don’t imagine for a minute that the rEU won’t make those rules to suit its members at the expense of outsiders – that’s how it worked when Victorian Britain made the rules; that’s how it always works.

    Brexiteers have totally misread the balance of power between the parties. Sure rEU exporters will take a hit but we will take a much, much bigger one. They know that as small to medium sized countries they must hang together or will hang separately. We, with our heads still filled with hazy memories of empire, don’t understand what it means to be a middling country in a world of giants like the US and China.

    How long before May and her cabal wise up? And what of the general public? There is a case to be made here but I’m not hearing it.

  • Bill le Breton 9th May '17 - 7:15pm

    The price of oil fluctuates at the moment as US monetary policy fluctuates. Every time Jan Yellan hints she will raise interest rates the price of oil falls and when the US economy slows in response ( an expected reduction in demand for oil) the price falls. At the moment Yellen is once again talking about raising rates twice more this year. The price of oil falls.

    Now, the UK exchange rate is actually determined by the Bank of England and the MPC’s monetary policy. Anticipating a fall in output at the time of the referendum decision the Bank of England engineered a reduction in its policy rate.

    The previous Governor, Mervyn King, had been saying at the time of the referendum that the £ was over valued against the Euro (because the Germanic European Central Bank had been trying to keep the value of the Euro down).

    Brexit seems to have given the present Governor the chance to bring down the value of the £ and restore an exchange rate than supported faster UK growth. We know this because as someone wrote above when the fall in GDP failed to materialise, he didn’t reverse his change to monetary policy. So most if not all of the fall in the £ resulted from a policy of responding to ECB produced weakness in the Euro. (via QE).

    But don’t worry look what renewing QE in UK and continuing QE in the Euro Zone brought about? Higher output in both the UK and in the Euro Zone.

    Magic. But not an excuse to blame Brexit. Quite the reverse, it would seem.

  • Peter Martin 9th May '17 - 8:23pm

    No-one can have it both ways. But I suppose at election time no politician or political party is going to want to explain that.

    However, the simple truth is that a high pound sucks in imports and makes our exports less competitive than they would otherwise be. A high pound means we run a trade deficit.

    And, like it or not, someone in the UK (either the government or you and I) has to finance that deficit by borrowing.

    So, in a nutshell a high pound creates trade deficits which creates debt.

    So what do you want? A low debt economy or a high pound?

  • Peter Martin 9th May '17 - 8:47pm

    @ Bill le Breton

    “Now, the UK exchange rate is actually determined by the Bank of England and the MPC’s monetary policy. Anticipating a fall in output at the time of the referendum decision the Bank of England engineered a reduction in its policy rate.”

    This is largely but not entirely true. The BoE can set interest rates, both short and long term, to whatever it likes. Short term is just a matter of making a decision. It was decided to lower rates to 0.25% in August last year. Longer term its by intervening in the bond markets. If longer term rates are to be lowered, the supposedly independent central bank decides it would like to buy up bonds in the market. QE in other words.

    But the BoE doesn’t have absolute power to fix the pound at an unrealistically high level as the events of Black Wednesday (1992) showed. If the speculators smell blood they move in quickly and it can be an expensive lesson for any government trying to fix its exchange rate. It’s much better to set interest rates to where you think they ought to be and then let the pound float freely.

  • J George SMID 10th May '17 - 9:31am

    Nick is right in claiming that the price of petrol is higher than it needs to be because of the fall in the pound. The price of food is higher (see Channel 4 dispatches), so is clothing. This is not ‘Project Fear’, this is ‘Project Real’. Nick’s reasoning is the problem; it should have been: 70% of petrol price are taxes, 30% is oil cost. Oil is accounted in dollars (not only the purchase cost but OPEX as well). If the pound lost 15% value (say) than we pay 4.5% more that we would have otherwise. That is roughly 5p if the pump price is £1,11 (5,5p if £1,2 etc). The actual price level does not come into it – with a weaker pound we will always pay more (in pound terms) for foreign currency imports whatever the actual price is.

    And LibDems are right to highlight both: the unfulfilled Brexit promises (Project Real) and the alternative aspiration (Project Hope).

  • Dave Orbison 10th May '17 - 12:12pm

    @ Chris Bertam re free hospital parking and ‘abuse by commuters’ “Will be difficult and expensive”.

    Even if this were so it shouldn’t deter us from the need to look at this. The cost can be significant for those on low income. In any event there are all sorts of relatively low cost options used by supermarkets to avoid this problem. For example time-limited tickets easily eliminates the all-day commuter problem.

  • Re: free hospital parking and local circumstances leading to unforeseen problems.

    Isn’t this a really clear sign that the decision ought not to be taken in central London and handed down from on high to the people who actually know the local circumstances and can foresee the consequences?

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