Filed at 6:05 a.m. ET
LONDON (Reuters) - A temporary rise in the oil price would have a negligible effect on the UK public finances but a permanent rise would create a loss, the Office for Budget Responsibility said on Tuesday.
Finance minister George Osborne had charged the new fiscal watchdog to report on the effect of oil price fluctuations on the public finances in order to inform his decision on whether to implement a "fair fuel stabiliser" where duty could be cut when oil prices rose.
The OBR concluded that there was almost zero impact on the public finances if oil prices rose temporarily. Although corporation tax, supplementary charge and petroleum revenue tax revenues would rise, there would be other offsetting factors portable kerosene heaters.
Higher pump prices would reduce demand for fuel, it said. In addition, inflation would push up the indexation of tax thresholds, benefits, public service pensions and index-linked gilts.
And higher oil prices would also reduce household income and the supply potential of the economy.
