Low price of oil will fuel UK economy

The research institution has calculated that if oil prices stabilise at $20 a barrel, it would ensure that the economy grows by 0.4pc more than it otherwise would this year and by 0.8pc more than expected in 2010.

However, the fall will cost the Exchequer a significant amount in lost tax revenues, potentially reducing the public sector current budget this year and next.


The findings came in its comprehensive exploration of the economic implications of falling oil prices.

The crude price rose to a record $147 a barrel last July before dropping back to just under $40 by the end of the year as the global economy started to slide. Item Club economist Hetal Mehta said that while the rise in prices put pressure on businesses, the fall should provide a boost in the coming months.

Telegraph