28th September 2009

The car manufacturing industry could slide into a "double dip" recession if the Government does not continue to help out, according the Engineering Employers Federation.

The business group urged for the car scrappage scheme to be extended as it had already helped slow the decline in production in the industry and saved a large number of skilled workers from becoming unemployed.

But car insurance companies looking for new customers will be disappointed to learn the EEF is "far from certain" that consumer demand for vehicles would be sustained should incentives be taken away.

Under the car scrappage scheme, people can receive a £2,000 discount when scrapping a vehicle more than 10 years old and replacing it with a new one.

EEF director of policy, Steve Radley, said the success is clear for all to see, putting "a floor under manufacturing recession".

He added: "It is no means certain that this positive trend will continue in the near future with consumer confidence still fragile and unemployment still rising."

The EEF joins the Society of Motor Manufacturers and Traders (SMMT) in calling for an extension to the scheme. The SMMT said the £300 million funds would run out by the end of October and urged for the scheme to be extended until next February.

Copyright © Press Association 2009

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