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Auto industry gets £2bn rescue package

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Business secretary Peter Mandelson has announced a £2bn package of measures for the industry, which employs nearly one million people and contributes £10bn to the economy.

The plan includes:

* Guarantees to unlock loans of up to £1.3bn European Investment Bank (EIB) guarantees for investment in lower carbon initiatives.

* Loans or loan guarantees to support of up to £1bn of lending for lower carbon initiatives for non-EIB backed projects.

* Increased funding for training of employees under ‘Train to Gain’.

* Mervyn Davies, the new trade and investment minister, tasked to draw up a plan for improving access to finance for manufacturers’ finance arms.

According to Mandelson: "Britain needs an economy with less financial engineering and more real engineering. The car industry can and should be a vibrant part of that future.

"The steps we are taking today will help companies speed their way to becoming greener, more innovative and more productive. This is the route to securing jobs for the long term as we build a more balanced economy for Britain’s future."

The announcement is hardly a surprise, given the state of the automotive sector and the previous bail out of that other troubled industry – finance.

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