The head of Land Rover and Jaguar called on Thursday for government cash for industry as UK carmakers said that they were facing the worst market for many years.

At the Paris motor show, David Smith, managing director of Land Rover and Jaguar, said that the UK was on the verge of a severe recession and there was the same need for state aid as there was in the US. There the Government has pledged $25 billion (£14.2 billion) for investment in green technology by the car industry.

Mr Smith called for government action to boost consumer confidence, including tax cuts, and for special help for the automotive industry, which suffered its worst August sales in the UK for 40 years and is the country's industrial largest employer.

He said: “If the US needs to take a bold move we do, too, and the quicker the better. If we let this go on, the impact on manufacturing will be severe and that will have an impact on jobs.” Mr Smith is pressing the Government for cash to pump into environmental work in the car industry and across other parts of manufacturing.

Land Rover and Jaguar, which were this year bought from Ford by Tata, the Indian conglomerate, have suffered some of the worst sales falls in recent months and all their factories have cut production. Their entire casual workforce, which numbered 500 at its peak, will go by the end of this month.

The head of the two iconic British marques also called on the Bank of England to cut interest rates. He said: “The Bank of England needs to cut rates. The issue is clear and urgent. We are in danger of going into quite a severe recession.” He said that if parts of the manufacturing base were forced into collapse they would be lost for good.

Some industry commentators have warned that Land Rover and Jaguar are more vulnerable than other carmakers because they are overly exposed to the premium and large vehicle segment of the market. This sector has taken a bigger knock as people and businesses shy away from higher prices and the greater fuel requirements.

But Mr Smith said that the group enjoyed the protection of Tata, its large parent. He said: “We have been very clear that we are focused on investing for the future but taking short-term action as we need to.”

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