The Government is to cut 490,000 public sector jobs over the next four years.
Chancellor George Osborne announced the cuts during the Government’s spending review today and said they had to be made in order to address the UK’s £109 billion deficit which is generating £120m a day in debt interest.
Osborne did not outline how the job cuts would be made geographically, stating it was up to “individual departments”.
Dealers expressed concern to AM that the loss of public sector jobs would knock consumer confidence among those affected.
Sue Robinson, Retail Motor Industry director, said: "A loss of half a million jobs in the public sector could impact the ability of consumers who rely on their incomes from this sector to be more circumspect in their spending habits.
"This in turn could have an impact on the sales of vehicles, certainly in the short term, until those involved regain job security or find other employment."
Osborne didn't just announce cuts though. Dealers will be pleased to hear there will be a 50% increase in funding for adult apprenticeships.
Steve Yardley, chief operating officer for Remit, the RMI's commercial arm, said: "We hope the increase will improve skills within the motor industry by funding training and development and thus make an apprentice an affordable option for garages.
"Plans to increase funding for adult apprenticeships, helping an extra 75,000 people by the end of the spending review period, are positive and encouraging news for our industry, and we hope to see the uptake of apprenticeships by employers for this age profile of learners.”
A new bank levy will be introduced too but full details won't be revealed until Thursday. It's been confirmed the new banking bill will look at corporate and domestic lending.
Robinson said: "We are concerned that the banks continue to lend to businesses and that obstacles are not put in their way to do so.
"The Government has announced an extension of taxes on the banking sector. Again, we would not like this to impact on the banks' lending criteria. From a consumer perspective we would like to ensure that any restrictions on the banks' lending does not impact on the consumer’s ability to source finance to purchase vehicles which in turn will have a negative impact on the motor industry."
A further £7bn will be cut from the welfare budget in addition to the £11bn previously announced in the Emergency Budget in June.
Osborne also revealed that the state pension age would rise to age 66 in 2020, saving £5bn a year.