November 2008 Car News - GBCarLoans.com

24th November 2008

Gordon's short-term tonic for motorists, is not enough

In responce to a pre-budget statement Edmund King, AA president said: "The Chancellor is giving with one hand and taking away with the other. Increasing fuel duty whilst reducing VAT shows that the Chancellor is playing roulette with global fuel prices and could lose his gamble. It is a very big gamble as there are 32 million motorists out there and most of them have a vote. If the global price of oil increases this hike may come back to haunt the government. It also means that when VAT reverts to 17.5% the motorist will be hit at the pumps once again."

The AA welcomed plans to increase capacity on the motorway network. Congestion costs billions of pounds to business as well as individuals each year.

Plans to increase VED by a maximum of £5 in each band was welcomed by the AA. Edmund King, said: "We believe Government plans to delay the massive hikes in VED is welcome. However this still seems like a temporary reprieve or a "short-term tonic" to the car market but uncertainly about future taxes does little to promote consumer confidence today.

"Gordon's short-term tonic for motorists, whilst welcome, is not enough to bring the fizz back to the used and new car market."

VAT cut by 2.5%will save 1.72p on a litre of unleaded at the pump.

If fuel duty increases by 2p per litre then the saving on VAT will be lost.

the Chancellor gains 0.5 pence/litre

Recent high fuel prices have severely affected AA members in terms of them having to cut back on journeys, or other expenditure or both. It is not just families, businesses also have been suffering. The Chancellor has continued to freeze fuel duty. This should help stimulate other spending in the economy and also help restore some business confidence.

As for Car Sales, the temporary cut in VAT will reduce the price of new cars but because there are no other incentives (such as a scrappage scheme) will probably not be enough to boost the market again. A couple of hundred pounds of the price of a new car will not be incentive enough to many people to buy.

 

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