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Some good news from the manufacturing sector

Car production rose by 54% in May to 104,365 vehicles, and was up 62.6% over the year-to-date, according to figures released by The Society of Motor Manufacturers and Traders (SMMT). They also announced that the production of commercial vehicles also rose by an incredible 129% in May compared to the same month last year to 10,745, and was up 55.7% over the first five months of this year.

This means that the recovery in both UK vehicle and engine production has continued for seven consecutive months, but it has to be remembered that this is from a very low base. At this time last year the industry was in the depths of recession, and one producer, Honda, actually temporarily stopped production in Swindon.

Car production is stepping up, but for how much longer?

However, it is good news although Paul Everett, SMMT chief executive was reticent as to whether this progress would continue. He noted that: “There is concern that fiscal consolidation across Europe may impact demand for months ahead.” He went on to say: “It is important that next week’s Budget helps to sustain consumer and business confidence, as well as encouraging UK investment in new technology and advanced skills.”

But with the government already swinging the axe yesterday it does not augur well for the future. Although it was announced that Ford would be given a loan guarantee of £360m in order to support £1.5bn of low-carbon investment in vehicle production and Nissan was able to retain its £20.7m grant into electric car production at Sundereland.

In contrast, however, Sheffield Forgemasters lost a government loan of £80m which had been promised in March, to enable them to expand into making parts for nuclear power stations. This would have made them one of only two companies worldwide, which would have had this facility.

With cancelled programmes announced yesterday totalling £2bn, and another set of suspended programmes adding up to £8.5bn, the coalition government will be scaring private industry to death as to what else is in store in the coming weeks.

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Posted in government spending, Manufacturing

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