Britain on Tuesday unveiled a 2.3-billion-pound (2.5-billion-euro, 3.2-billion-dollar) support package for its ailing auto industry, hit hard by the global economic slowdown.
But Business Secretary Lord Peter Mandelson said the plan did not amount to a “bailout” or a “blank cheque.”
He argued that the sector was “vital” to Britain and the government had to take action “to prevent an irreversible loss of capacity, skills and technology.”
As part of the package, the government will offer guarantees to unlock loans of up to 1.3 billion pounds from the European Investment Bank, and will offer guarantees on a further one billion pounds of loans.
“Today's measures will provide a specific boost to the industry, providing real help and laying the foundations of its reinvention for a low carbon future,” Mandelson told the House of Lords.
“The automotive industry with its more than one million employees … is at the front line of the downturn with output falling faster and further than any other sector.”
“The steps we're taking today will help companies speed their way to becoming greener, innovative and more productive.”
The package comes a day before Mandelson meets with British car industry leaders, from manufacturers to suppliers, in London.
As in other countries, Britain's auto industry has been hit hard by the global slowdown. Production slumped by nearly half in December as manufacturers responded to sliding demand, according to industry figures released last week.
But Mandelson insisted: “This industry is not a lame duck and this is no bailout.”
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 carmakers 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.
The number of cars made in Britain fell 47.5 percent last month compared with December 2007, while commercial vehicle production slumped 56.7 percent, the Society of Motor Manufacturers and Traders (SMMT) said last Thursday.
Mandelson's announcement was welcomed by SMMT chief executive Paul Everitt, who said it “recognises the strategic contribution of the motor industry and follows action in other EU member states, the US and Japan.”
“The UK motor industry is productive and globally competitive with a long-term future at the heart of the low carbon agenda.”
Unions and opposition political parties, however, were not as upbeat about the package, with Tony Woodley, joint leader of the Unite trade union, describing it as a “massive disappointment.”
“This is a fraction of the support being given by almost every other government in Europe,” Woodley said.
The opposition Conservative Party's business spokesman Kenneth Clarke, himself a former finance minister, condemned the package as “pretty small beer.”
“This package is part of the government being behind the curve, too late, not responding to events which are deteriorating by the week,” he said.
