Britain has announced that it will guarantee up to £2.3 billion of loans to its car industry to help it cope with a slump in demand due to the credit crunch.
The British government will guarantee up to £1.3 billion of car industry loans from the European Investment Bank and a further £1 billion of loans to back investments that are not eligible for support from the European lender, Business Secretary Peter Mandelson told the House of Lords.
Jobs have already been axed in the industry and a number of plants are on extended shutdowns because of the drop in sales. Japanese giant Nissan announced earlier this month it was cutting 1,200 jobs in its plant in Sunderland, northeast England, which has around 5,000 workers and is one of the biggest employers in the region.
Luxury car makers Jaguar and Bentley have also announced production stoppages to reflect lower demand. Jaguar, an iconic British brand owned by Indian group Tata Motors, has also slashed 450 jobs.
Lord Mandelson said today's measures offered a 'significant boost' to the industry but he denied the British government was offering a 'bail-out' or a 'blank cheque'. The government is to assess any bids for loans on a case-by-case basis.
