The leader of Britain's biggest business group has urged the Government to extend the car scrappage scheme until the general election to help the recovery from recession and boost employment.
Richard Lambert, director general of the CBI, said the scrappage programme had been a big success and had helped support manufacturing jobs across the country.
The Government has extended the scheme, under which motorists receive a £2,000 discount for trading in cars over 10 years old, by £100 million to £400 million.
The cost is shared between the Government and the car industry, and analysts expect the money to run out early in the New Year.
Lambert, speaking ahead of the CBI annual annual conference on Monday, said: "The scheme cannot go on forever, but the Government should think seriously about extending it until the general election."
Lambert said car manufacturers were concerned that the ending of the scheme, coupled with VAT returning to 17.5% in the New Year, will hit sales just as the industry recovers from the economic downturn.
The theme of the one day CBI conference is "roots to recovery", the issue at the heart of every sector of industry following a year of rising unemployment, the crisis in banking and the general state of the economy.
Lambert said there was no doubt the economy was "stabilising", with business groups now predicting that unemployment will not reach three million next year, as previously feared.
But there was still a lower level of economic activity, and evidence that firms cannot do any more to hold on to staff, he believed.
Asked if the CBI regarded the Government as being particularly business-friendly, Lambert replied: "Our members would probably say no."
Motorpoint has slammed new calls to extend the car scrappage scheme - again.
CBI Director General Richard Lambert is the latest to urge the Government to carry the scheme beyond the end of February, when the £400m scheme is scheduled to finish.
> Car supermarket Motorpoint has reacted strong against a scrappage scheme extension. David Shelton, managing director, said: “It is clear from Ford’s latest results, and the news that GM are planning to pay back loans early in the US, that car manufacturers have definitely turned the corner and for the Government to give into calls to use yet more public funds is wrong.
“Rather than continue to subsidise their businesses, we would like to see the Government do something for motorists as a whole, such as keep VAT at 15%, as this would benefit far more people in far more ways than the scrappage scheme.”