An end to all recessions

[rov1200]

http://news.bbc.co.uk.../business/8343948.stm

It has been announced today that the car scrappage scheme has assisted a 33% increase in new car sales during October compared with last year. Schemes using cash for bangers have already pulled the US, Germany and France out of recession.

Could this be the golden elixir that will prevent recessions in future?

Or do you think these countries have used another method?

[buildersmate]

You do have some unusual ideas about how Cause and Effect linkages works, Rov. Oh but economic models were that simple.

[Panic Button]

The scrappage scheme has done wonders for the likes oh Hyundai

[Gromit]

It is overstating the success of the scrappage scheme to say it has pulled these countries out of recession.

It has saved the motor industry in those countries and ours and has saved jobs, but has not pulled them out of recession. No single scheme has, it has been the huge injection of public money into the economy of which the scrappage scheme was just a small part.

No economies are recession proof.

[jake-the-peg]

It's probably not insignificant in GM's decision not to sell Vauxhall,

and the electric mini work starting in Oxford

The UK's a major car manufacturer - it's just we don't seem to have British management capable of running a British company

[rov1200]

There seems to be two lines of thought coming from financial experts.

1. The fiscal measures adopted by all these countries and that means stimulus measures to revive the economy. There is no doubt that the scrappage scheme is a major trigger mainly because of the high resale price of the product and has an enormous effect on the figures.

The US was in dire straights until belatedly they followed France and Germany in offering the Cash for Bangers scheme. Because of the large subsidy by the government and only for a short period it had immediate affect.
The UK was not only slow to act but the subsidy was less than other countries. As Panic Button has pointed out our motor industry has been in decline for years and we stand to benefit less than others. Even so the UK will emerge from recession soon.

2. The second line of thought from economists was the result of Quanitative Easing where £175bn was used. Whether this has any effect maybe we will never know. France and Germany however did not use it.

3. As Jake points out Vauxhall has been saved by GM mainly due to the upsurge in sales of motor vehicles.

If this is the deepest recession we have ever witnessed the results of car scrappage has proved it to be a working solution. It is not widely known that the finance of cars does not often come from the banks but car manufacturing in house loans.

[Le Chat]

I work for Mercedes and can tell you that in our 'group' the scrappage scheme has been very poorly received. None at our particular showroom and very few at others. Perhaps people who want Mercs are wealthy enough not to need this scheme....or maybe you don't jump from a delapidated vechicle to a Mercedes so abruptly!!

[rov1200]

Le Chat I don't think the scrappage scheme is meant for Mercedes owners. What the lowest priced car? £20,000+?

Buildersmate Obviously the conditions have benefited the scheme. The Bank rate at an all time low, Savings rates close to zero, extremely low interest rates, a high population of house owners who have paid off their mortgages and a temporary reduction in VAT.

But we are a car owning country and to keep in with low insurance and road tax an incentive to buy the latest model is overwhelming. The demand will always be there.

[youngmafbog]

Well jake we dont have a PM cabable of running a bath do we?

Its down to him we are still in recession whilst every wealthy country apart from Italy has pulled out of it. And who was it who said "we are best placed to come out". Another little porkie pie amongst many I guess.