|    FM Home   |    FM News   |    FM Forum   |    FM Blog   |   
Friday 03rd of July 2009
January 27, 2009

Lord Mandelson unveils £2bn package for UK’s struggling car industry

by Kay Murchie

This afternoon, Business Secretary, Lord Mandelson, unveiled a rescue package of £2.3 billion for the UK’s ailing car industry.

The package comes after months of pressure on the Government to take action after the Society of Motor Manufacturers and Traders (SMMT) warned that the industry was “battling” for its survival.

Many car manufacturers have been forced to place their employees on 3 or 4 day weeks, while Jaguar Land Rover announced 450 job losses earlier this month and Japanese car maker Nissan cut 1,200 jobs at its Sunderland plant.

However, Mandelson said the package is not a ‘bailout’ or a ‘blank cheque’ but measures include £1 billion of direct loans and a nationwide scheme designed to help British manufacturers meet demand for environmentally-friendly motors.

Furthermore, Lord Mandelson revealed guarantees for £1.3 billion in loans from the European Investment Bank.

Meanwhile, a further £35 million could be made available to increase funding for retraining workers in the industry.

Commenting on the package, Lord Mandelson told The Times that he believes “the measures will provide a specific boost to the industry“.

Around 800,000 people are employed in the UK car industry and according to Mandelson, the industry has fallen “further and faster” than any other during the credit crunch.

The economic downturn has meant consumers have cut back significantly on spending on non-essential items as they ’make do’ with their old car.

The union, United’s joint leader, Tony Woodley, said £2 billion might sound like a lot of money but most of this will be swallowed up by Vauxhall and Jaguar Land Rover, leaving nothing for other companies.

Mr Woodley added that the figure should be doubled since it is just a small portion of the financial support being provided by European Governments.

Last week, the French Government said it would offer up to €6 billion (£5.5 billion), to avoid major companies such as Renault from collapse.

Across the Atlantic in the US, General Motors and Chrysler have received billions of dollars in order to avoid bankruptcy. The two companies, along with Ford, warned in December that millions of jobs could be lost in the industry if the Government did not agree to a package of loans.

Discuss this in the Finance Markets forums

Story link: Lord Mandelson unveils £2bn package for UK’s struggling car industry

Add to Bookmarks:




Tags: £2bn package, , , , Lord Mandelson, , , , unveil


Previous: « Parents encouraged to make a will
Next: Bank shares recover, sterling rises against dollar »

Visited 873 times, 2 so far today

No Comments »

No comments yet.

RSS feed for comments on this post.

Leave a comment