Middle East Crisis: Government should target financial support rather than apply blanket reductions to fuel duty, to avoid unintentional impacts |
As fuel stocks continue to be eroded, and inventories are not sufficiently supplemented due to continued blockages in the Strait of Hormuz, we will soon begin to see the full economic effects of the Middle East crisis arise in Northern Ireland.
Real shortages in supply and wider price impacts are already affecting other regions and there is mounting political pressure for financial support - the Executive is, of course, not immune to this.
There is legitimate rationale for support for NI given our particular exposure in relation to the prevalence of home heating oil, relative rurality, reliance on imported energy and associated costs underpinning the transport of goods into the region.
Such inflationary impacts – with the potential for associated tightening in monetary policy – will further erode living standards and increase the cost of doing business, which is problematic given our structural challenges in relation to the economy and public finances.
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While providing targeted assistance for households and businesses is both valid and a moral imperative, there are some economic considerations that ought to be factored in to any such plans.
Around two-thirds of households in the north rely on kerosene to heat their home. (K Neville/Getty Images)There has been some public discourse, both locally and further afield, regarding the need to reduce energy costs by cutting fuel........