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UK government finally addresses problems of automotive industry

The UK government has today announced a scheme to pump more than £2.3 billion into the automotive industry and a number of smaller programs to ensure the technical know-how and skills within the industry are not lost forever. Lord Mandelson today announced the government's response to the ever worsening automotive industry trading situation by confirming that a £1.3 billion European investment bank loan would be unlocked and used to assist the industry as well as government guarantees of a further £1 billion in lending and loans where appropriate. However, the government insist "this is not a bailout".

While there is no doubt that the automotive industry in the UK directly and indirectly employs literally hundreds of thousands of people and is said to contribute over £10 billion in the economy there is concern that yet again taxpayers appear to be footing the bill. The European loan is slightly different in that it is coming from a separate source but the £1 billion in new liquidity would appear to be at the expense of taxpayers.

It will be interesting to see how the £2.3 billion overall package impacts upon the ever worsening situation within the automotive industry and whether the government has more success than they had with the banks.

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