European backing for state aid plan

The European Commission has approved the Government's multi-million-pound state aid package to help the UK's struggling motor industry.

The assistance plan, which involves £1 billion of loans and guarantees as well as £1.3 billion of funding from the European Investment Bank, was unveiled by trade secretary Lord Mandelson last month.

Business minister Ian Pearson said the Government was grateful to the Commission for its "swift response" and approval of the state aid application.

"We welcome applications for the Automotive Assistance Programme that's now up and running just one month after announcing our support package for the automotive industry," he said.

"We are committed to helping the car industry bridge to the low-carbon future. Our package will support both manufacturers and larger automotive suppliers in delivering the new investment that will be vital in ensuring the industry comes out of the current downturn with the skills and technology needed to be competitive in the global automotive market."

Mr Pearson added that the motor industry, banks and trade bodies would hold a seminar in the coming weeks to ensure that the application process "runs as smoothly and effectively as possible".

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