Car scrappage scheme is driving economy.

UK car production fell by 6.7% in October compared with a year earlier - the smallest annual decline of the year. There were 106,400 cars made last month, according to the Society of Motor Manufacturers and Traders (SMMT) which believes the continuing impact of the Government's scrappage scheme and a recovery in global markets is helping to drive production. So far this year, 801,169 cars have been produced in the UK, a fall of 38.1% on the same period last year. The decline in commercial vehicle production was much more dramatic, with year-on-year figures showing a fall of 39.5%. Production for the first nine months of the year is down 60%.

In September, the number of new cars made in the UK fell 16.1% from the same month a year earlier.

But the SMMT forecast "another difficult year" ahead for the car industry and called on the Chancellor to use his Pre-Budget report "to help sustain and strengthen recovery".

In September, the Government announced the scrappage scheme, introduced in May, would continue, at a cost of pounds 100m.

The extension incorporates an extra 100,000 vehicles, including vans that are eight, rather than 10-years-old.

CBI director general Richard Lambert said: "The scheme cannot go on forever, but the Government should think seriously about extending it until the General Election."

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BIG IMPACT The Government has announced the scrappage scheme will continue, at a cost of pounds 100m.