BMW is contributing £1 billion a year to the British economy via operations such as its engines plant at Hams Hall near Birmingham and the Mini plant at Oxford.

The figure emerged from an independent study by Oxford Economic Forecasting to quantify the German carmaker's impact.

Based on 2004 figures, the study found that BMW Group directly contributed £1 billion to GDP that year.

The figure is the equivalent of an extra third of a penny on the basic rate of income tax, OEF said.

But adding in the contribution that BMW makes to its suppliers and the wider economic activity that it supports, the figure rises to an estimated £2.5 billion.

The group and its dealers employed nearly 200,000 people and purchased raw materials, components, capital equipment and business services totalling £1 billion from UK suppliers in 2004.

Since controversially ditching Rover in 2000, the Munich-based group has spent a bout £900 million on improving its British facilities - including the new factory at Goodwood in Sussex which is now the home of Rolls-Royce and the Mini panel-pressing operation at Swindon - and its 2004 spend of £96 million presented 0.7 per cent of total UK manufacturing investment.

That figure would have increased last year as BMW extends and upgrades the Oxford factory at a cost of £100 million to accommodate the next generation of Mini.

Hams Hall, which supplies four-cylinder engines to BMW factories in Germany, the US and South Africa, and which cost £400 million, will develop further in the next 12 months when it begins to produce Mini engines.

"During a time when UK manufacturing has struggled, the BMW Group has made a significant contribution to the UK economy," Oxford Economic Forecasting managing director Adrian Cooper said.

BMW UK managing director Jim O'Donnell said: "Our UK businesses have now developed into a strong and cohesive group."