UK Fuel sales fall by a BILLION litres (which is a £637m hole in the Treasury's tank)

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The Treasury is facing a £637 million deficit after fuel sales dropped by one billion litres this year, the AA revealed.

Service stations in the UK sold 835 million fewer litres of petrol and 247 million fewer litres of diesel in January to March 2011 compared to the same period three years earlier.

The 15 per cent dip in petrol sales and the 6 per cent fall in diesel sales were caused by higher fuel costs and consumers tightening their belts.

AA president Edmund King said the report was terrible news for the British economy.

Mr King said: 'The full impact of higher VAT, unbridled stock market speculation and a weaker pound on fuel prices and drivers' ability to afford them have been laid bare.

'The first three months of this year saw the equivalent of 13.5 days of UK petrol sales wiped out - good for the environment but appalling for families, business, rural communities and the Treasury.

'Our study shows the real impact of record pump prices. Petrol and diesel prices continued to set new records up until the second week of May, adding a further 4.3p a litre to the cost of petrol and 3.3p to diesel.

'However, supermarkets have launched a sustained campaign of fuel-related promotions and, combined with a loss of appetite among oil market speculators leading to falling oil prices, the next quarter's figures will be significant.