Economic Update ‘bitterly disappointing’

The automotive industry has urged the government to expand its Economic Update to include long-term stimuli and sector-specific measures.

Chancellor Rishi Sunak announced a range of far-reaching initiatives yesterday, but while measures being taken to protect jobs has been welcomed, the Society of Motor Manufacturers and Traders (SMMT) and the Finance & Leasing Association (FLA) have both said the steps don’t go far enough in other areas.

Mike Hawes, SMMT chief executive, said: “[These] announcements to safeguard jobs and encourage consumer spending in some parts of the economy are welcome – but it’s bitterly disappointing the chancellor has stopped short of supporting the restart of one of the UK’s most important employers and a driver of growth.

“The automotive sector has been particularly hard hit, with thousands of job losses already announced and many more at risk. Of Europe’s five biggest economies, Britain now stands alone in failing to provide any dedicated support for its automotive industry, a situation that will only deter future investment.

“We urgently need government to expand its strategy and introduce sector-specific measures for UK auto to support cash flow such as business rate holidays, tax cuts, and policies that provide broader support for consumer confidence and boost the big ticket spending that drives manufacturing. Until critical industries such as automotive recover, the UK economic recovery will be stuck in low gear.”

Meanwhile, Stephen Haddrill, director general of the FLA, said: “While we support the government’s efforts to get the economy going again, the measures announced are primarily short-term stimuli, and need to be supported by more substantive plans for long term growth.

“The FLA will be publishing its own recommendations for the UK recovery next week, which will look at the short, medium and long-term needs of an economy where confidence must first be re-established, then consolidated with investment in new ways of doing business.

“A sustained recovery will require lenders to play a major role. But to do so, they need more support, particularly those outside of the Bank of England schemes, because of the scale of assistance they are currently providing to their customers in difficulty – our most recent figures show that FLA members received over 1.8 million requests for forbearance. When furlough comes to an end, millions will remain out of work. Supporting them and the economic recovery at the same time will be a bridge too far.”