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New car registrations in EU fall 10 per cent in first-quarter

Except for the UK, all major European car markets posted double-digit percentage declines.

New car registrations in the European Union (EU) as a whole declined by 10 per cent compared to the same period a year ago, according to the European Automobile Manufacturers Association (ACEA).

During the quarter, car sales fell by 13 per cent in Germany, 12 per cent in Spain, and 15 per cent in France. New car sales in Cyprus slumped 59 per cent in March 2013, compared to March 2012.

Except for the UK, all major European car markets reported double-digit percentage declines during the quarter.

Volkswagen (VW) sales in the EU declined 8 per cent in the first-quarter, while General Motors (GM) posted a 13 per cent sales decline. Car sales of PSA Peugeot Citroën fell 15 per cent, while Toyota and Ford sales declined by 18 per cent and 20 per cent respectively. However, sales of BMW and Daimler cars remained flat.

Max Warburton at Bernstein Research asked in a recent note: “What is going on in Germany? How can it be so bad when employment and economic growth remain solid? Consumer confidence driven by euro-related concerns seems to be the main factor, with retail demand, as opposed to corporate car buying, in free fall.”

BMW, Audi, owned by VW, and Daimler’s Mercedes-Benz rebounded strongly from the 2008 crisis due to demand from China and other emerging markets.

Warburton told the Financial Times: “The evidence is building that we are at the end of the cycle for German auto earnings . . . With growth slowing, mix [of high versus low-margin models] worsening and spending rising, earnings are going sideways at best for the foreseeable future.”

Christian Klingler, board member for sales at Volkswagen cautioned last week said that “the data for March clearly show that the markets are becoming even more difficult”.

Volkswagen is forecasting flat earnings for 2013. Meanwhile, Daimler expects an operating profit in the first quarter to be very clearly be below the level of the fourth quarter.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.