In a letter to the Chancellor EEF, together with a number of other industry trade bodies, argues that the UK scheme, together with those in other EU countries, has been successful in stemming the decline in production in a key industrial sector, whilst helping to retain significant numbers of skilled employees directly and in key supply chains.
However, EEF believes it is far from certain that consumer demand for motor vehicles can be sustained in the near future at these levels without government and industry providing incentives to replace older vehicles. As such, there are clear risks that the recent upward trend will go into reverse once the current scrappage scheme expires.
In addition coupled with the expected deterioration of the UK aerospace and defence industry in 2010, any relapse in the output of the automotive sector could have serious consequences for a recovery in manufacturing prospects.
Commenting, EEF Director of Policy, Steve Radley, said:
"The success of the scrappage scheme has been clear for all to see and has put a floor under manufacturing recession and helped retain skilled employees. However, it is no means certain that this positive trend will continue in the near future with consumer confidence still fragile and unemployment still rising.
"Failure to extend the scheme before a stronger recovery is in place runs the risk of pulling the rug from under the automotive sector, damaging key supply chains and prospects for a better balanced economy in the upturn."