The Institute for Public Policy Research (IPPR) has urged the UK government to lower speed limits as part of a package to mitigate the economic impact of the Iran conflict on consumers. The thinktank proposes capping speeds at 20mph in towns and cities and 60mph on motorways to reduce fuel demand and combat rising oil prices.
The IPPR also recommends a temporary 10p cut in fuel duty and a new energy price cap of £2,000 a year to support households. Without intervention, inflation could peak at 5.8%, the institute warns. Senior economist William Ellis stated: 'The UK cannot afford to sit back and let another energy shock drive up inflation and damage the economy.'
Lowering speed limits would be a 'dual win', reducing fuel demand while making streets safer for walking and cycling. The measure could prove controversial; Wales reduced its default limit to 20mph in 2023, and a BBC poll found over half of residents opposed it, despite a 10% drop in road casualties.
The International Energy Agency has advised member countries, including the UK, to consider similar emergency measures. The IPPR estimates the Treasury could lose up to £8bn annually from higher debt payments and lower tax revenues without a support package. The proposed policies would cost up to £5bn a year, far less than the £76bn spent during Liz Truss's 2022 energy crisis response.
The fuel duty cut would apply until spring 2027, and the price cap would trigger automatically if Ofgem's quarterly estimates exceed £2,000. Researchers say the measures could reduce peak inflation by up to two percentage points and potentially avert interest rate rises by the Bank of England.
