Rate Cuts 'May Not Help Car Industry'

Motorists who are already shelling out for things like car insurance, road tax and fuel may not be persuaded to buy new vehicles by interest rates cut alone, it has been suggested.

According to the Retail Motor Industry Federation (RMIF), although the move could help put drivers looking to borrow money update their current model, it will not be welcomed by savers.

It explained people who rely on the interest accumulated on their savings for their disposable income will be even less inclined to buy a new vehicle when the amount they are making falls.

The body also claimed this meant the reduction may be ineffective in encouraging Brits to start spending again, unless the country's leaders also introduce tax cuts and support for businesses.

The director of RMIF stated: "The government's reliance on interest rate reductions to stimulate the economy should be part of a wider package of measures and we urge that more direct approaches are used."

Earlier this week, RMIF also stated that people would be unwilling to splash out on big purchases until they were sure they were secure in their jobs.

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