$14 billion US car bail-out fails

Republican demands have forced the collapsed of the proposed $14 billion (£9 billion) emergency rescue package for three major US car manufacturers.

Talks in the Senate broke down after the bail-out was rejected 52-35 on a procedural vote, well short of the 60 required.

The groups came close to agreement, but the United Auto Workers union did not agree to demands by the Republicans that they have to agree to steep pay cuts by 2009.

The rescue plan had been approved by the lower House of Representatives on Wednesday. Now General Motors and Chrysler say they could be weeks from collapse, while Ford says it does not need government help now, but its survival is "far from certain."

The White House said it was now considering its options, while Senate majority Leader Harry Reid said he was "terribly disappointed."

An official White House statement said that the deal had provided an opportunity for the three firms to avoid bankruptcy.

It added: "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

Copyright © Press Association 2008