THE increase in petrol and diesel prices will shut companies down, a Longhope haulier has warned.

The rise in fuel duty and VAT is expected to add around 3.5p to the average cost of a litre of both unleaded petrol and diesel – a huge amount for hauliers who have to buy fuel in thousands of gallons at a time.

Richard Read Jnr, director of Longhope haulage firm Richard Read Transport, said the rise in fuel costs would have a devastating effect on businesses.

"When you're buying in diesel 28,000 litres at a time, even a fraction of a penny can make a big difference," he said.

"This is going to drive a lot of people out of business.

"We've invested in more fuel-efficient vehicles but the rise in fuel will unfortunately cancel out any benefit.

"I don't know if there's going to be any fuel protests or blockades, but they don't do us any good.

"We're working with the Road Haulage Association and the Government – it's something that needs lobbying properly."

Several high street retailers said the Christmas period had been very quiet and that there had been no rush of customers buying items before the 2.5 per cent VAT rise was introduced on Tuesday.

Don Burgess, owner of the Freeminer Brewery and chairman of the Forest of Dean Federation of Small Businesses, said it would be the fuel costs rather than the VAT rise that would hurt businesses and consumers the most.

"The VAT rise is going to be the equivalent of 25p on £10 so it's not a huge amount," he said.

"But the rural economy relies on distribution so the rise in fuel costs will hit people hard.

"People need to ask themselves whether they need to drive to Gloucester to do their shopping when it could be done locally."

Ricky Boseley, sales manager at Cinderford firm Dean Electrical Wholesale, said: "My personal opinion is that the VAT rise won't make a shred of difference to us. We make price labels for retail customers for use on packaging and only one out of around 100 customers has asked us to increase the price.

"The fuel is the only thing that's going to make any difference."