Falling oil prices may provide a substantial boost to the economy over the next three years, but too much of a fall may do exactly the opposite, research has found. The study by the Ernst & Young ITEM Club has said that deflation will occur if prices continue to drop. Recent months have seen the price of oil decline, reaching $36 a barrel this month, compared to more than $147 a barrel in July 2008. According to senior ITEM Club economist Hetal Mehta, if prices were to stabilise at $40 a barrel, the contraction in GDP could be down by 0.3% next year, adding 0.6% to growth in 2010. For consumers, a fall in prices is good news, but for some sectors, the UK and governments worldwide, the fall is problematic, resulting in declining revenue for oil companies and oil revenue-dependent governments. For the UK, the tax revenue generated by North Sea oil reserves would decrease. 'It is very possible that a further fall in the international oil price will spark deflation that will further damage a global economy that is already stumbling into 2009,' Mehta said.