Scrappage has come under attack after it emerged that imports of cars surged in the third quarter of this year, worsening the UK's trade deficit and contributing to the recession.
According to the Guardian newspaper, statisticians have singled out rising car imports as the major contributor to a sharp increase in the trade deficit, to £7.2bn, from £6.5bn in the second quarter of the year.
Despite the fact that exports of British cars are also rising, the Office for National Statistics said the deficit on the UK's car trade rose by £400m over the quarter – equal to the total cost of the scrappage scheme to taxpayers.
Karen Ward, UK economist at HSBC, told the Guardian: "In recent years 85 per cent of the new car registrations were of imported cars. If households diverted consumption away from spending on hotels and restaurants to take advantage of the car scrappage scheme, this may have actually served to depress UK GDP."
Vince Cable, Liberal Democrat Treasury spokesman, said: "I was very concerned about whether the scrappage scheme would primarily provide a financial lifeline to German and Japanese industry, rather than our own.
"I would recognise that the car industry is very interconnected, that some of these imports had British components, but this does show that the scrappage scheme has substantial unintended costs and consequences."
Join the debate
Add your comment
Re: Scrappage 'prolonging recession'
The main point, which is that the scrappage scheme has harmed the economy is still valid in spite of the factual errors by Vince Cable and the Gruniad and the childish insult-trading here. There is only a limited amount of money to go round, no matter how quantitatively you ease the banking system, and a fair chunk of this has been siphoned abroad, especially to Korea.
I am just waiting for the used car bubble to burst, as it inevitably will. The scrappage scheme has only succeeded by paying £2,000 apiece for cars that the trade would have turned its collective nose up at in the first place, so I expect that the current price of secondhand cars will be unsustainble. The money that I save by holding fire on replacing my car should go to fund a couple of pleasant holidays in Britain
Re: Scrappage 'prolonging recession'
report away old bean, as it appears the now-banned kairo wasn't the only person here to have no sense of irony, satire or indeed humour. the term 'national treasure' ought to have spelled it out for you. i was actually going to preface the term 'foreigner' with 'johny', but i thought that would have been too obviously satirical. apparently not...
and no, i'm not a member of the bnp - i am many things, but completely unhinged is not one of them. not that my political affiliations are any of your business - i'm old fashioned enough to believe that one's religion, politics and finances should remain scrupulously private and beyond public discussion. if a few people here held to that view and simply discussed cars, this would be a nicer place all round.
Re: Scrappage 'prolonging recession'
So foreigners can't have an opinion in this country anymore?. Sounds like a touch of racism there!. Not a member of the BNP perchance?.
Perhaps this is also worthy of reporting to the editor!.
As for the article, is anyone really surprised that this Government has managed to make a mess of the scrappage scheme?. Not only is the economy being damaged by the number of cars being imported from abroad, the second hand car market is now struggling badly due to a shortage of decent, cheaper used cars being available.