Fuel prices in the UK will be forced up if the referendum on Scottish independence causes uncertainty in currency markets, the PRA has warned.
PRA chairman Brian Madderson said that in recent days the pound has suffered its worst exchange rate performance against the US dollar since Lehman’s problems triggered the global financial collapse in 2008.
From a high of over $1.71 in mid-August the pound has weakened to below $1.65 and this has pushed up UK wholesale prices of retail road fuel by nearly 2.00ppl.
However, currency specialists in the city, such as Goldman Sachs, are forecasting that the pound could devalue by at least a further 5% or more if there is a vote for independence in the Scottish Referendum on 18 September.
Madderson said this would increase the cost of road fuel by as much as 3.00ppl, assuming that the global market for crude oil remains stable, but this is by no means certain given the current geo-political tensions in Ukraine, Syria, Iraq and Libya.
He added: “Experian Catalist data shows that total retail fuel volumes in Scotland are 3.1bn litres per year so any run on the pound caused by the referendum could costs motorists and businesses north of the border at least an extra £155m a year. For the rest of the UK the extra cost would approach a massive £1.75bn each year which would be a huge negative drag on the economy and significantly increase inflation.”
Madderson also warned that the independent forecourt sector in Scotland was under even more intense pressure than in the rest of the UK.
He said: “The road fuel volume split by sector in Scotland reflects the extraordinary and unchecked increase in supermarket forecourt development, up by a staggering 90% since 2000, which compares with 20% for the remainder of the UK.
“This is almost certainly the major cause for so many small and often rural independent forecourts closing down their pumps leaving huge swathes of the country without refuelling facilities. This has to be an urgent issue for any Scottish Government to resolve.”