The Bank of England has cut interest rates by 1.5 per cent, appeasing leading UK motor industry figures who have called for dramatic action in recent days.
Reducing interest rates to 3 per cent from 4.5 percent – a move that represents a significant shift in British economic policy – could boost the confidence of new car buyers and make credit more freely available from banks.
David Smith, chief executive of Jaguar Land Rover, had this morning called for “courageous and decisive action” to bring UK interest rates more in line with America’s.
The Bank of England’s landmark decision comes just a day after JLR announced 400 further redundancies from its UK factories.
Society of Motor Manufacturers and Traders (SMMT) boss Paul Everitt echoed the Jaguar boss while announcing the worst decline in cars sales since 1991 today. He called for “cuts in interest rates” to be “swiftly passed on to consumers.”
The SMMT and JLR had blamed a lack of consumer confidence for declining sales, something that interest rate cuts could help remedy.
But UK car manufacturers are still pushing for European investment to develop more efficient vehicles.
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Car finance is a measure
Re: Rate cut boosts car industry
How come JLR had enough money to develop 4.0 supercharged versions of just about every model they make during the years of plenty but now want the government to fund development of more eco friendly vehicles? The short sightedness of British motor industry management appears not to have changed since the days of Leyland.
Re: Rate cut boosts car industry
Monk, m'boy, there are a number of us who aren't mortgaged to the hilt having funded Audi and BMW through our houses left. These people like to finance their cars (finance something that depreciates, buy something that appreciates). These people, in the current climate, would not buy a new car unless the deal is particularly attractive. Low finance deals are therefore a way of getting people with means to spend again. We're not all in the $hitter.