Smaller engines that are speed limited would use less fuel. The more fuel we use - the sooner the massive price hikes will return. It's like having your central heating on and leaving the windows open - it's just a waste of energy.
You're not wrong, but it isn't that simple with vehicle engines.
There's a relationship between engine size, power output, and fuel efficiency.
Generally, the more power expended, the more fuel used, but there are situations where power is needed, e.g. haulage, and Getting Out Of Trouble.
Of course, the latter wouldn't be as necessary if
all vehicle top speeds were reduced, but I don't know how you'd go about confiscating all the powerful cars that exist in the country.
Morbikes, FYI, are not big fuel guzzlers, relative to the speed they do. Mine would easily achieve 40mpg at a constant speed of 120mph, for example. More when gentle and/or going slower.
You don't have an industrial size freezer in your house, or a commercial sized washing machine. Do you dig your garden with a JCB? Or have an escalator to go upstairs? Then why do you need a car with a 3 litre engine that uses fuel like a silly yank?
I'll thank you to leave my silly yanks out of this.
However, the car I use for lugging stuff around is quite heavy on fuel, but if it were less powerful then I wouldn't keep up with the 1.1 Fiestas, and going slower than other traffic is a safety problem.