June 23, 2020 / 4:06 AM / 2 months ago

UK car sector calls for more government help to handle virus hit

FILE PHOTO: Parked cars are seen at the Vauxhall plant as the outbreak of the coronavirus disease (COVID-19) continues, in Ellesmere Port, Britain March 16, 2020. REUTERS/Phil Noble

LONDON (Reuters) - Britain’s car industry called on the government to introduce additional measures such as a sales tax cut to boost the sector as a third of automotive workers remain furloughed due to the coronavirus outbreak.

Factories closed in March as a lockdown was enforced to contain the spread of the pandemic with some still shut and many operating at a much reduced output, setting the industry up for the lowest level of production in decades.

Car and van volumes are expected to fall by a third to 920,000 units this year and up to one in six jobs are at risk, the Society of Motor Manufacturers and Traders (SMMT) industry body said.

The government has introduced a series of policies to support the economy including a furlough scheme which sees it pay 80% of salaries, up to 2,500 pounds ($3,120) per month, for staff who are placed on temporary leave.

“Government’s intervention has been unprecedented,” said SMMT Chief Executive Mike Hawes.

“But the job isn’t done yet. Just as we have seen in other countries, we need a package of support to restart, to build demand, volumes and growth,” he said, calling for measures to boost consumer confidence and unfettered access to emergency funding.

The sector, Britain’s biggest exporter of goods, is also worried that trading terms with the European Union could worsen after a Brexit transition period finishes at the end of 2020.

“A ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953,” the SMMT said.

The government has promised to support business throughout the coronavirus crisis and talks are ongoing between London and Brussels to secure a trade agreement with the EU to come into force from Jan 1.

Editing by Stephen Addison

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