The effects of a potential collapse in the auto industry would be far more wide-ranging than previously imagined, the head of financial services firm KPMG in Birmingham has said.

Jaguar Land Rover is in a race against time to secure a Government bailout the company said is vital for it to continue trading.

Indian owners Tata pumped tens of millions of pounds into the firm to keep it running while thousands of JLR workers and employees at supporting firms waited to see whether the Government would act to save one of the Midlands’ biggest employers.

But Mel Egglenton, the senior partner of KPMG in Birmingham, said the JLR problems were not just felt in the automotive sector, and the future of many white-collar jobs were tied in with the future of large-scale manufacturing firms.

KPMG’s Birmingham office represented car parts firm Wagon Automotive, which collapsed earlier this month, putting hundreds of jobs at risk.

And Mr Egglenton said professional services firms would come under pressure from the turmoil in the automotive and manufacturing sector, with the Midlands likely to be one of the worst-hit areas.

He said: “I don’t think it’s unique, but I would say because the Midlands has got a lot of auto business or manufacturing, which is turning into a tough area, things could be difficult. Wagon was a client of ours, we had looked after them since before I was here.

“That’s going to be difficult for us, unless the Government steps in to help. This will put us under pressure, and of course the problems in the retail sector too.

The UK branch of KPMG, which is Europe’s largest integrated accountancy firm saw turnover rise to just over £2 billion in the year ending September 30, an increase of three per cent on the same period the year before.

In Birmingham, Mr Egglenton said the audit and forensic divisions had performed well over the year, but the final quarter had been “tough”.

He said: “This year so far I’m told the national picture is about flat and we are slightly down. To be honest if we got to the end of December I think if things are flat for us then that would be a good result.”

He said corporate finance deals had been a difficult sector for the firm, adding: “Deal flow is poor, absolutely poor, getting finance is very very difficult.

“There was a lack of finance and I think that’s meant the people who have got cash are sitting quite well-placed but are very of over committing until they see what happens in the new year.

We don’t expect any tickle until the end of spring, simply because the banks have got their own issues, and trading for most firms is a lot worse than even if their balance sheets were sorted out because the conditions for lending are so tight. It’s difficult out there.”

Sources have suggested it would take a bailout of more than £500 million from the Government to keep JLR going, but the issue has turned into a political hot potato, with the Government refusing to be drawn on its position.

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