The UK will cope with the MG Rover collapse and the cutbacks at Jaguar and Peugeot without "too much pain", Bank of England Monetary Policy Committee member Kate Barker insisted yesterday.
But the West Midlands was in for a "tough" spell - much depended on the effects on the supply chain and whether more companies would go to the wall.
Speaking on a visit to Birmingham, Ms Barker, a former Ford executive, said of the sector: "People have written off the auto industry before and it is surprisingly resilient."
And she expressed the hope that other UK car makers would pick up the sales loss from MG Rover's demise.
Ms Barker said there was already evidence that redundant MG Rover workers were finding jobs, albeit not as well paid.
And she revealed that the company's collapse had figured in the most recent MPC discussions, particularly in the context of "surprisingly weak" March manufacturing data.
Ms Barker defended the MPC's record against accusations from some quarters that rates were kept higher than needed because it was constantly undershooting its Government targets.
She said the MPC strived to be perfect but "I have to admit were are not always".
Nevertheless it had been closer to meeting those targets than many had expected when it was first put in charge.
It was possible to argue that at certain points the MPC could have had rates a quarter point lower than they were.
But no more than that. "It was that order of magnitude. We are not talking about something which would mean a big difference to the economy."
Ms Barker said people who had issues to raise should buttonhole MPC members as they were going around the country on their visits.
"Let us know," she pleaded. But, she claimed, not many chose to take up the opportunity.
Ms Barker said: "It is our reputations on the line. We don't want to get it wrong."
Ms Barker rejected claims that the MPC had over-egged the pudding when raising rates in early 2004. Inflation stayed unchanged last month at its March level of 1.9 per cent.
"It does not feel that something has gone badly wrong," said Ms Barker.
However the first quarter had been a difficult time, with high debt levels and a slowing housing market having an impact on consumer sentiment.
The MPC had to balance questions such as how long the current weakness in consumer spending would last with evidence of inflationary pressures coming through in higher energy costs and imports.
She insisted the Committee was sensitive to the problems of manufacturing and denied sacrificing the sector to deal with inflation threats from the housing market.
And Ms Barker denied the MPC suffered from not having industrialists or small business people among its members.
However the Committee's task was largely a technical one and economists were "the best people to do that".