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Lord Mandelson and the £400 million sweetener

This weekend Lord Mandelson is said to be in discussions with unions and Magna, the Canadian outfit which is on the verge of acquiring GM Europe. The discussions will revolve around the Vauxhall subsidiary, which has a significant exposure in the UK, and the thousands of jobs which are potentially at risk if the company decides to move production overseas.

This is something of a U-turn as earlier in the week the UK government had refused point blank to discuss subsidies for Magna but now Lord Mandelson, with the backing of Gordon Brown, is more than willing to sit around the negotiating table. The truth is that the German government initially pushed for the deal with massive sweeteners but has since discovered it would be very difficult to fund the promised "loans" itself.

The UK government has been something of a spectator up until this point although with the German government backing off a little over the last few days, Lord Mandelson has obviously seen a route towards a strong negotiating position. It will be interesting to see what happens over the coming weeks and months because the last thing the UK government needs is a potential closure of the Vauxhall operation just weeks before the next general election.

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