Ford has will raise its UK prices by an average of 4% on orders received after June 30.

The company blamed the weakness of the pound against the euro, which will see prices for the Ka, Fiesta, Focus and Mondeo models will rise by £600 to £650 while an S-Max will cost £700 more and a Galaxy will go up by £800.

Ford admitted to the BBC that raising prices in a recession with a scrappage scheme in place, "may seem counter-intuitive".

Nigel Sharp, managing director Ford of Britain, said: “In common with most of the UK auto industry, Ford is reacting to the sustained weakness of the pound against the euro.

"Raising prices in difficult times, and when a scrappage scheme has been introduced, may seem counter-intuitive but with so many of our costs priced in Euros, there is no choice if we are to maintain a viable business.

"The exchange rate through to the end of 2007 had been stable for around 10 years with the pound worth around €1.43, recent exchange rates have been about €1.16."

Sharp said the impact of the drop on a car priced at £15,000 is close to £3,500 which had to be absorbed by the business. He said the total revenue impact had already been into nine figures for Ford in the UK.

Sharp told the Press Association that Ford was selling between 1,200 and 1,500 vehicles a week in the UK under the scrappage scheme, but added that he still expected 2010 to be a difficult year.

Sharp said: "There could be a reduction in demand again. The reduced VAT rate is due to end at the end of this year and the car scrappage scheme will also finish. There are one or two clouds on the horizon."

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