In an about turn, the UK government has today revealed it will provide GM Europe with a £270 million loan guarantee in order to secure the company's operations in the UK. The move has come as something of a surprise after various similar proposals by other companies were turned down by the UK government at the height of the recent economic turmoil.

The government has validated this move as a way to ensure the Vauxhall offshoot is successful and the thousands of jobs in the UK, dependent upon the company, are secured. However, those with long memories will see similarities with the MG Rover situation where a significant government guaranteed loan was given to an automotive company just weeks before an election. While nobody is suggesting this is in any way an identical situation the timing of the move is a little unnerving to say the least.

GM Europe was on the verge of being sold to Canadian outfit Magna last year when General Motors turned around and withdrew the company from the marketplace. Since then negotiations have been ongoing around Europe with General Motors determined to extract as much assistance for its offshoot as possible. The UK government has finally step forward with a large loan guarantee but the timing of the move has raised some concerns.

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