Price £34,775 ENGINE Capacit y 2.0-litre turbo diesel POWER OUTPUT (BHP @ RPM) 178 @ 4,000 TOP SPEED (MPH) 140 FUEL ECONOMY (MPG) 67.3 CO2 EMISSIONS (G/KM) 109

In many ways, the Jaguar XE is the most important British car to launch this year or perhaps in the past five years. What other new car heralded not one, but two new factories and thousands of new jobs?

Automotive economics and numerous visits from George Osborne to the two new Midlands plants aside (he can't resist the photo-op, but Jaguar is actually Indian-owned these days), the new XE is up against some serious, almost exclusively German, opposition including the Audi A4, BMW 3 Series and Mercedes C-Class.

These cars are global sales success stories, but they are rather, well, dull. Thankfully, the new XE is certainly pretty enough to compete against it dour rivals, and thanks to Jaguar's new range of Ingenium efficient engines, it's clean and economical enough to compete. But is it the full package?

First, the negatives. In places, the interior switches feel, dare I say it, a little cheap compared to rival models. Nonetheless, the cabin is hardly a bad place to spend a few hours, especially when you consider the XE's compliant ride and smooth engine.

Sadly, it's not quite the same for passengers in the rear, where head and knee room are in short supply. It's not vastly smaller than the A4 or 3 Series, but it feels too tight for comfort, a feeling not helped in the front by the cocoon-like side-panels. In fact, I'm a meagre 5ft 11in and I found the driving position a little cramped. A taller driver might struggle more than they'd like in a car worth £35,000.

My test of the XE happily coincided with a trip to Scotland. Here, the geographically challenged cabin becomes a cockpit wrapped around you and the sensible XE becomes a pleasure to drive. There's no doubt its rivals are competent and rewarding to drive, but there's nothing like pushing a Jaguar that little bit too much on a wide A-road. The steering is responsive and delightfully weighted and there is plenty of gruff bite in the engine to zip along nicely.

Jaguars have always been able to offer unhurried speed and handling, but the XE is the first big car to offer that in a smaller and (more) affordable package – the entry-level XE is £7,000 cheaper than the larger XF model. There has, it seems, never been a  better time to buy British. Well Indian, but who cares about that.

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