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German government turns up the heat on GM Europe takeover

Despite taking the lead with regards to negotiations about the Magna takeover of GM Europe, the German authorities are now demanding that EU members such as UK contribute a significant amount of money to the proposed €4.5 billion loan which the German government promised Magna. This is a significant U-turn by the German authorities who had taken the lead due to the fact the GM Europe operation has more exposure to Germany than any other European country.

The UK government has been under pressure for some time with regards to the GM Europe situation and the fact that Vauxhall, which has a significant exposure in the UK, may well be looking to cut costs and cut investment. Despite the fact the UK authorities have a £2.5 billion fund available to assist the UK car industry, there are still concerns that the UK government is talking the talk but not walking the walk.

While the Magna takeover of GM Europe appears to be a done deal, there are still many issues to be resolved with funding most certainly top of the list. Whether the UK government will eventually be forced to inject a significant amount of money into the deal involving Magna is very much in the balance.

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