The UK motor industry has called for the Chancellor to clarify the government’s position on the single European currency in the Budget next week.

The call comes at a time when the industry is facing an increased tax burden, with the introduction of the Climate Change Levy, and shortly after a Trade and Industry Select Committee report urged government to support UK motor manufacturers.


The industry’s trade body, The Society of Motor Manufacturers and Traders says: “With no clear government position on the UK’s entry to the Euro, manufacturers battle against high costs and an uncertain future.


“The pound sterling remains strong and component suppliers in particular are struggling to be competitive. Eighty per cent of vehicles exported from the UK are destined for Europe and fewer components are being sourced from British suppliers, threatening jobs in this sector.


“A stable and competitive exchange rate must be a government priority if companies are to continue to invest in and support manufacturing.”


SMMT chief executive Christopher Macgowan said, “The motor industry is responsible for some 800,000 jobs and generates £46 billion ($US66.4 billion) for the UK economy.


“It simply doesn’t make sense for the Chancellor to continue to ride on waves of uncertainty coupled with high exchange rates while loading manufacturers with new taxes.


“As we wait for a decision on the single currency, companies are sinking under a raft of tax and currency pressures.’


Companies in the automotive sector will be hit by the new Climate Change Levy on 1 April, increasing their net energy costs by 10 to 15 per cent.


Although the SMMT has negotiated a discount for several vehicle manufacturers, the narrow qualifying criteria mean few in the sector can benefit. Those that have already invested in energy saving will be unfairly penalised because they do not run processes covered by the pollution prevention and control directive. The SMMT has urged the government to broaden discount criteria to reduce costs for those demonstrating a real commitment to reduced energy use.


The SMMT also says that government support for motor industry research and development is needed in the drive to promote innovation in the UK.


The trade organisation would like to see some of the £54 million earmarked for regional innovation funds invested in R and D and for the government to provide tax credits and other fiscal incentives to stimulate investment.