UK car manufacturers barred from direct Bank of England funding
It has been revealed that regulations currently in place are preventing the UK car industry from obtaining funding direct from the Bank of England. This little-known regulation could well scupper the eventual recovery of the sector even though the government announced a separate £2.3 billion package yesterday. As Toyota joined the list of car manufacturers in the UK looking to reduce their cost base it would be appear that time is running out for a government backed rescue package.
While the £2.3 billion package already announced has been welcomed by the industry the vast majority of experts are suggesting this is too little too late. Direct access to Bank of England liquidity would appear to be the only viable route to recovery in the short term although at the moment this is blocked. Even though the UK car industry is majority owned by foreign companies there are literally hundreds of thousands of people in the country who depend on the industry directly or indirectly full employment.
Each day that goes by seems to see more bad news from the sector with demand running ever lower and car manufacturers being forced into extended "holiday" periods. Industry leaders are this week locked in talks with the government's business Minister, Peter Mandelson, and the outcome of these talks will be vital to the prospects for the industry.
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