24 ÓCentre for Economics and Business Research (especially food and energy) which scales down the impact of fuel and the reduced purchases of fuel since Cebr’s earlier research was carried out. 5.4. NIESR The National Institute for Economic and Social Research (NIESR) has also looked closely at the impact of changing fuel duty31 though this was about ten years ago. The results of its simulations are shown in Figure 6. A 3p cut in duty is modelled to boost GDP by 0.11%, employment by 36,000 and to cut government revenue net by £186 billion. Figure 6 National Institute modelling of 3p cut in fuel duty 5.5. Treasury model using DGM32 This section explains how the Treasury’s CGE model has been used to simulate the effects of the reductions in the rate of fuel duty. It summarises the results in terms of increased economic activity (output, investment, wages, and consumption) and the extent to which this leads to the costs of the tax reduction being recovered. The report from which the calculations are made assumes a 20% reduction in fuel duty. Table 7 below summarises the results, which are expressed as percentage increases against the baseline except for the tax recovery rate which is in terms of the percentage of the static cost that is recovered. 31 Discussion paper 398, September 2012 The Impact of Fuel Duty on the Macroeconomy by Aurelie Delannoy, Dawn Holland and Iana Liadze 32 This is taken from the paper from the Treasury and HMRC which describes the impact of a 20% reduction in fuel duty. HMRC and HM Treasury Analysis of the dynamic effects of fuel duty reductions Publication date: April 2014
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