Bloomberg quoted Mr Peter Mandelson business secretary of UK government as saying that it will offer carmakers GBP 2.3 billion of loan guarantees to help them cope with the recession and adapt to new environmental rules.

Mr Mandelson said that manufacturers will be allowed to tap GBP 1.3 billion of financing the European Investment Bank made available to UK companies last year and another GBP 1 billion of backing from the Treasury. He added that "The auto industry has taken the brunt of the downturn far more quickly and more deeply than other industries. It would be appalling if we would take the downturn, ride out the recession and let a key sector like this go to the wall."

It may be noted that UK car and truck production tumbled 49% in December 2008, the most since August 1979. Companies including General Motors Corporation's Vauxhall unit and Jaguar Land Rover have been asking for aid for more than two months.

The UK industry supports 850,000 jobs and produced 1.65 million cars in 2008, 76% of them for export. Other European governments already have extended aid to their automakers, and the European Union has promised to step up subsidies for research.

(Sourced form www.bloomberg.net)