In a move to strengthen its domestic automakers, the UK announced that it will guarantee up to £2.3 billion ($3.25 billion) in loans to the auto industry. The loans will help the ailing manufacturers cope with the low demand for new cars due to the economic downturn.
Up to £1.3 billion in loans will come from the European Investment Bank. The country will guarantee the other £1 billion in loans to back investments that are not eligible for support from the European lender.
In December the UK auto industry experienced the largest decline in output in nearly 20 years. Aston Martin cut a third of its workforce and Jaguar Land Rover was reportedly seeking a £1 billion loan from the British government the month before.
Along with the announcement, a government spokesman said that it was willing to do what it takes to make sure the country has “the strongest possible car industry in the future.” The spokesman said that the loans were not a bailout and says the package will utilize funds that were allocated in November for specific sector interventions.
Source: Automotive News