Ford has increased its UK prices by an average of 3.75% citing the continued weakness of the pound against the euro, which this week edged even closer to parity (GBP1 = EUR1.085 Wednesday morning). The rise applies to all new orders after 31 March.

The plunging pound versus the euro is increasingly concerning UK residents with retired expats living in Europe seeing their pensions falling in real terms. There have been warnings that the price of many consumer items will soon rise.

“We are reacting to the continued decline of the pound against the euro”, said Ford of Britain MD Nigel Sharp. “Raising prices in such difficult times may seem counter-intuitive, but as a UK business with so many of our costs priced in euros, we have no choice if we are to protect jobs and remain viable.

“The euro has strengthened 30% in the past 18 months,” he added “and 18% in last 12 months alone. The weakness of the pound had a huge negative impact – well into nine figures – on Ford’s UK business in 2008.”

He also warned that price-inflationary pressure would continue to be an issue for all UK-based businesses whose costs were incurred in euros until sterling strengthened.

Separately, car-buying website Parker’s named last Monday (23 March) as the best car-buying day of 2009, saying that price cuts, high stock availability and bonus-chasing dealers made it the optimum time to buy before prices on new and used vehicles started to go up again in the summer.

Anyone looking for a new car now stands to make a substantial saving on what they would have paid 12 months ago, the website said.

Parker’s said that the biggest discounts will start to disappear as existing stocks of new cars are run down, while production cuts will bring supply into line with demand by the end of the year.

It noted that automakers were facing increased import costs as the pound remained weak and an increase in value added tax of at least 2.5% comes into effect later this year.

The UK government is expected to belatedly announce a ‘cash-for-scrap’ scheme in the budget on 22 April that would see owners of older cars subsidised to trade up to a new model. Critics have said foreign automakers would benefit as most cars are imported but the retail side of the business is keen to see the carrot dangled in front of consumers to spur demand.

A similar scheme in Germany boosted sales 21% in February and looks like being extended.