IPPR calls for UK speed‑limit cuts and fuel‑duty trim to tame Iran‑war inflation

IPPR urges the UK to cut urban speed limits to 20mph and motorway limits to 60mph, plus a temporary fuel‑duty reduction, to blunt Iran‑war‑driven oil price spikes and keep inflation below 5.8%.

The thinktank says slower speeds cut fuel demand, easing pressure on Brent crude (BZ=F), which rose 3.2% to $86.40 a barrel after the latest Middle‑East tension. Lower demand would also relieve BP (BP.L, market cap £102bn) and Shell (SHEL.L, market cap £201bn), whose shares slipped 1.1% and 0.9% respectively on the same day. The IPPR estimates that without such measures inflation could peak at 5.8%, up from the current 4.0% rate.

A support package would include a 10p cut in fuel duty until spring 2027 and a new energy price cap of £2,000 a year, above Ofgem’s current quarterly cap of £1,641. The Treasury could lose up to £8 billion annually in tax revenue and higher debt costs if no action is taken, according to IPPR modelling. The package would cost roughly £5 billion a year, far less than the £76 billion spent during Liz Truss’s 2022 energy response.

Lower speeds reduce fuel consumption directly, which in turn softens oil‑price spikes that feed into transport and production costs. By dampening those cost pressures, the policy aims to shave up to two percentage points off inflation, potentially averting further Bank of England rate hikes. The Bank kept rates at 3.75% last week but warned of future increases if energy disruption persists.

Watch for government response on speed‑limit legislation and fuel‑duty adjustments, as well as Brent crude movements and FTSE 100 reaction over the coming weeks.