The German government yesterday vetoed the 1.1bn euro loan guarantee it had agreed to provide General Motors in a move which could have repercussions for Vauxhall workers in the UK.
Rainer Bruederle, Germany’s economy minister with an anti-state aid stance, announced the backtrack yesterday, saying: “I’m convinced GM has sufficient financial resources.”
The decision has been made 48 hours after Germany, in Britain’s vein, unveiled an 11.2 billion euro fiscal savings programme.
“GM is naturally very disappointed with this decision as is Opel after such a very long process. We’ve spent a long time answering many, many hundreds of questions being reviewed by many, many different committees,” said Opel Chief Executive Nick Reilly. “I don’t particularly understand the reasons why.”
GM reckons on spending 1.9bn euros on restructuring its European in total, a significant part of which was to come from Germany which is home to four Opel plants and some 25,000 workers. The Uk government is to guarantee £260m worth of loans, as agreed by former business secretary Lord Mandelson.
Although Chancellor Angela Merkel said the “the last word on the future of Opel hasn’t been spoken yet” over this matter, there are fears that the retraction GM’s cutbacks including 8,300 jobs lost, 500 of which will be suffered at the Vauxhall’s van making Luton plant, could now be intensified.
Reilly says he does not expect GM Europe to run into liquidity issues this year this year though.
GM is now expected to try and bridge the funding gap through regional rather than central German funding.
The company employs 48,000 in Europe in total including 5,000 in the UK.