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GM, Nissan confident that UK gov't loans will escape spending cuts

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GM, Nissan confident that UK gov't loans will escape spending cuts

May 19, 2010 06:01 CET

LONDON (Reuters) – The UK units of General Motors Co. and Nissan Motor Co. are confident that Britain's new coalition government will keep millions of pounds of loans in place to support carmakers, despite imminent spending cuts.

"As the new government coalition moves into Parliament, former spending commitments will be investigated in light of the new government's policies and priorities," General Motors said.

"We are confident that manufacturing in the UK is a sector seen as making a valuable contribution to the UK and deserves government support," the company added in a statement.

The center-right Conservative party has forged a coalition with the Liberal Democrats after ending 13 years of Labour rule in the May 6 election.

The previous Labour government signed off a 270 million pound ($390 million) loan guarantee in support of GM's Opel/Vauxhall turnaround and 20 million pounds for Nissan to support capacity adjustments and investment into new low-carbon products.

"It is our understanding that an agreement has been made with the Department of Business, Innovation and Skills (BIS) and that the new coalition government is fully supportive of progressing a greener economy and zero emission transport will be at the heart of that," a Nissan UK spokeswoman said.

Ford UK, which received a significant loan guarantee from the previous Labour government, declined to comment when contacted by Reuters.

The review forms part of the new coalition's plan to cut unnecessary expenditure commitments to start paying down Britain's 163 billion pound budget deficit.

Britain's Times newspaper on Tuesday reported that the loans would be reviewed this week by David Laws, the chief secretary to the Treasury, to see if they represent value for money. The report added that Laws would also seek advice from government lawyers as to whether the government can renege on Labour's promises.

A Treasury spokesman was not immediately available to comment.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100519/ANE/305189977/1193#ixzz0oNwSqVSI

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