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Interest rates held at 5%

The Bank of England has held interest rates at 5%.

Sue Robinson, director of the RMI national franchised dealers association (NFDA), said the hold wasn’t enough and interest rates needed to be cut.

She said: "The economy needs a rate-cut kick-start to re-energize consumer spending.

"Current economic uncertainty is making consumers cautious about making major purchases, such as a new car. Many will wait to see how the situation plays out through the summer. By not trying to combat such hesitance, the Bank of England is in danger of making the situation worse."

In addition, upcoming changes to vehicle excise duty (VED) mean many motorists could see their car tax double.

Figures released yesterday show that 33% of cars will be taxed at a lower rate following the abolition of the existing VED exemption on higher road tax rates for vehicles emitting more than 225g of CO2 per kilometre registered between March 2001 and March 2006. Around 44% of car owners will be required to pay a higher VED rate.

Robinson said: "Previously the Treasury stated that many owners will be better off under the new rules. These figures show that this is not the case.

"A recent study showed that despite appearances, the real cost of car ownership has actually fallen in the last 20 years. With prevailing high interest rates, and the proposed VED changes, the Government seems determined to reverse this trend."

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