BELGIUM: EU bureaucrats have their say on British government help for MG Rover

By just-auto.com editorial team | 11 April 2005

The European Commission reportedly expects the British government to notify it within the next 24 hours of its plan to provide emergency funding to help prevent the immediate lay-off of 6,000 workers at car maker MG Rover.

Reuters said commission spokesman Jonathan Todd told a daily briefing on Monday that it appeared the British government's support to MG Rover would be state aid and therefore had to be notified to the EU executive for approval before being paid out.

"In theory no aid can be paid out before we have been notified, but we can be flexible if it is a case of hours," Todd reportedly said.

Reuters noted that the British government at the weekend said it would provide a £6.5 million ($US12.2 million) loan to the company to cover wages and expenses for one week.

Todd reportedly said it was too soon to judge whether the aid from the British government was in line with European Union rules on state aid but the commission would be able to give a signal soon after receiving the necessary information.

The news agency said the commission has to make sure competition within the EU is not distorted, but Todd said "companies can qualify for rescue aid on condition that the loan or the loan guarantee does not last longer than six months and within that six-month period either the money is repaid or the company goes into liquidation or the money is transformed into restructuring aid."