Honda, the Japanese carmaker, today said it will close its factory in Swindon for two months, leaving nearly 5,000 workers with only basic pay during February and March.

Today's move by Honda means that production in Swindon will be cut by a further 21,000, reducing overall output at the plant by 53,000.

The company's 4,800 Swindon-based workers will still be paid for the time production is halted, receiving between £370-400 a week, and the company will look for candidates, aged 56 years, to take early retirement

Honda's announcement follows similar inititatives in the UK by other carmakers, including Ford, who are struggling with spiralling sales.

Cash-strapped consumers are putting off large purchases such as cars as the economy shrinks and unemployment rises while cautious banks are unwilling to grant motor finance deals to borrowers.

Yesterday, Richard Lambert, the CBI Director-General, risked the wrath of Britain's biggest industry when he said that UK carmakers should not receive large American-style bailouts.

His comments to The Times come after the Society of Motor Manufacturers and Traders (SMMT) petitioned the Government for a range of support, including loans to the industry.

Fears are growing for the future of Vauxhall's Ellesmere Port plant because its parent, General Motors, could go under next month. The unions have called for £13 billion in state support for the industry.

Since the beginning of October, Toyota has halted the night shift at its Derby works, Ford announced it will move to a four-day week at its Transit van plant in Southampton until Christmas, and Land Rover did the same at its plant in Solihull. In Crewe, Bentley’s factory has moved to a three-day week.

Ford announced earlier this month that it will cut 10 per cent of its workforce as it attempts to combat the slump in worldwide sales.

Honda's move today is part of a wider move by the company to cut production.

Output in Japan will fall by 40,000 vehicles, bringing planned domestic production to 1.278 million units in the business year to March 31, down 1 per cent from last year.

It said yesterday that it would reduce production in the US by cutting at two plants in Alabama and Ohio.

Honda sales in the US, the world’s biggest car market, fell almost 4 per cent through October, compared with a nearly 12 per cent decline for Toyota and a 7 per cent drop for Nissan.

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