Saturday 17 January 2009

Car credit bail-out plan from Gordon Brown (UK)


The 8th month of slumping car sales has rung alarm bells in Gordon Browns head. The government is considering introducing a scheme - backed by taxpayers' money - so people can get credit to buy new cars. Around £20 billion is borrowed in the UK each year to buy new cars. Around half of all new cars are bought on credit.

However, as banks and lenders have drastically reduced the amounts they are loaning, many would-be buyers are thought to have been unable to get the credit they need to make the purchase. 'We have to look at what we can do so that the market doesn't freeze,' Prime Minister Gordon Brown has said.

This proposal has been strongly criticised already. Commentators say that encouraging people to take out more loans - which they may not be able to afford is not the right way to kick-start the economy again. Environmental groups have also argued that the government should be encouraging people to use public transport, not buy more new cars.

A Friends of the Earth spokesman said: 'The government must make sure any financial help it provides is tied to the manufacturing and purchase of greener cars.'

The U.S congress, meanwhile, is also considering measures to get people buying cars again. The Senate is considering a 'cash for clunkers' programme whereby people trading in an old gas-guzzler could get vouchers worth up to $4,500 towards the cost of a newer, more fuel-efficient vehicle. The vouchers could be traded for vehicles up to four years old, as long as they exceed federal economy targets by at least 25%.

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