Government has responded to the automotive sector’s calls to support the manufacturing led economic recovery, emphasising the importance of exports and trade growth. UK automotive is likely to benefit from measures designed to make the UK a more competitive place to do business and a more attractive location for international companies to invest in with measures addressing capital investment and skills.
Motorists received financial relief with an ongoing freeze on fuel duty rises, a 1p cut in duty and a commitment to increase VED only by the rate of inflation.
“Budget 2011 recognised the strength of the UK manufacturing sector and its ability to steer our economy out of recession,” said Paul Everitt, SMMT Chief Executive. “We are pleased to see that the Chancellor’s plans have a strong focus on manufacturing and making the UK an attractive place to invest. The outlook is certainly still challenging, but we are encouraged by the impact these measures will have on our sector and the wider economy.”
Plans to support more apprentices and enhance capital allowances are a positive move that will enable the automotive sector to realise its potential, helping to position the UK at the forefront of technology development.
The introduction of an additional 40,000 new apprenticeships on top of those already announced will prove a useful boost as manufacturing stimulates economic growth. However, the delivery of the proposal and the sectors that benefit from the skills development will determine the ultimate effectiveness of the move.
The cancelling of the fuel duty escalator is a very welcome move that, combined with the 1p per litre reduction, will see immediate financial pressure on motorists eased. This move will help to boost consumer confidence and economic growth, particularly benefitting the commercial vehicle and haulage sector. Hints at changes to the company car tax system are yet to be detailed, but SMMT hopes that part of the proposal includes the removal of the unjustified three percentage point penalty on diesel company cars.
UK automotive represents around 3% of total GDP, accounts for two thirds of total manufacturing turnover and is the country’s largest sector in terms of export, generating around £24 billion in revenue. Typically achieving a turnover of around £50bn, employing over 700,000 people and producing an annual net value-added to the economy in excess of £10bn, the significance of the sector cannot be underestimated. In 2010 the industry spent £1.5bn on R&D in the UK.
Click here for the SMMT briefing on key budget measures affecting the automotive industry.
Click here for the new VED rates for cars registered from March 2001.
Follow this link for the full budget from HM Treasury:
http://cdn.hm-treasury.gov.uk/2011budget_complete.pdf
