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Honda Motor president Takeo Fukui said: "Honda Motor Co. has come to the conclusion that we will withdraw from all Formula One activities, making 2008 the last season for participation."

He added the "difficult decision" has been made "in light of the quickly deteriorating operating environment facing the global auto industry."

Mr Fukui blamed the troubles on the "subprime problem in the United States, the deepening credit crisis and the sudden contraction of the world economies."

Honda's 750-strong staff reportedly first heard the news at a meeting, Sky sources said.

Staff were told that unless a buyer could be found by the end of December, the team would be wound up and not compete in next year's Championship.

Among the team's staff are British driver Jenson Button and Ross Brawn.

News Source: news.sky.com