Do you agree that the government should provide support to the UK car industry?

This is a fairly classic A2 macroeconomics question, and one that the European Automobile Manufacturers Association has been considering at their meeting in London last week. Their conclusion? That non-European governments should scale back assistance for their own automotive industries, but at the same time governments in Europe should support the industry’s efforts to cut car emissions.

Well, they would say that wouldn’t they? However, this report contains some great examples and data. Import tariffs and other barriers to trade - notably in India, China, South Korea and other large emerging markets for cars - provide a real boost for the embryonic markets in those countries. For example, India exports 250,000 cars to Europe every year, but only imports 5,000 vehicles from Europe, according to Paul Everitt, chief executive of the UK motor industry group SMMT. This gives a great example of the justification of protectionism to sunrise industries, in order to create economic growth. On the other hand the European Automobile Manufacturers Association points to its importance to the economic health of Europe and has urged EU governments to treat it as a strategic industry. The Coalition’s budget contained proposals to invest in green technology and this could be seen as one way to do it, particularly in the wake of good news about Nissan’s and BMW’s plans to invest further in their UK manufacturing plants for the Qashqai and the Mini.