GM Europe set to approach UK government for state aid
General Motors Europe is set to approach the UK authorities for £3 billion in state aid after warning that funds are running desperately low and the company expects to run out of cash towards the end of March. After the UK government refused to directly support the UK car manufacturing and car retail sectors this will be a serious test of the government's resolve and could have massive consequences for Gordon Brown.
While many expect the government to hold firm and rebuff the request for £3 billion in state aid GM Europe has suggested up to 300,000 jobs across Europe would be at risk, with a significant number in the UK. We have already seen massive job losses at GM's business in the US and Gordon Brown now needs to balance up the prospect of tens of thousands of job losses against £3 billion of state aid. In many ways he is in a no-win situation with other sectors having been ignored by the UK authorities and left to wither and die, on the other hand can he afford to be directly blamed for the loss of tens of thousands of jobs across the country?
GM Europe while in a very weak financial position would appear to have Gordon Brown and his Labour government over a barrel. Who will crack first?
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