What are the implications of this price decline for the UK economy? A simplistic view is that whether a price fall is beneficial or harmful depends on whether one is a buyer or a seller, and as the UK is now a net importer of oil, it should benefit. However, this view needs qualification. The North Sea oil industry has been badly hit by the price fall, so we can expect plenty of pain there. But for the many sectors of the economy which use oil as an input the effect is favourable. As far as the macroeconomy is concerned, consumer price inflation can be expected to stay extremely low and unlikely to exceed yesterday’s figure of 0.2% by much for some time. The overall effect on economic activity should be positive, as firms experience lower fuel costs and consumers’ disposable incomes, and hence spending, rise. We can expect the current modest rate of economic recovery to continue, with unemployment falling.